Sameer Africa now eyeing Somalia, Nigerian markets
What you need to know:
Allan Walmsley, the managing director of the tyremaker said, that the company was looking to nurture its niche products in the region and grow export sales significantly this year.
The company expects to open its Burundi subsidiary which will have a retail tyre centre and a depot, on June 15, and that this subsidiary, together with the one in Uganda and Tanzania are expected to contribute at least 20 per cent of revenues.
Sameer Africa has set it sights on the Somalia and Nigerian markets.
Allan Walmsley, the managing director of the tyremaker said, that the company was looking to nurture its niche products in the region and grow export sales significantly this year.
Sameer already supplies tyres to defence forces in the region after it launched the Yana Jeshi Extra 1400-20 tyre last year for sale to the Kenya Defence Force in Somalia.
“From studies, the market certainly exists. We are looking at Somalia … we just came back from Nigeria and hopefully in August we will do our first shipment. Export markets are already up 60 per cent this year,” said Mr Walmsley.
He said that the company expects to open its Burundi subsidiary which will have a retail tyre centre and a depot, on June 15, and that this subsidiary, together with the one in Uganda and Tanzania are expected to contribute at least 20 per cent of revenues.
The Burundi subsidiary will be used to re-export to Eastern DRC while the company is also looking at increasing its export sales to Zambia, Zimbabwe and Ethiopia.
Other export markets are expected to contribute another 20 per cent, bringing the total contribution of the non-Kenya subsidiaries and export markets to 40 per cent.
Sameer has faced rising production costs and increased competition from cheap imports in the tyre market, threatening its revenues.
A rise in players in the tyre market since 2005, when Kenya cut import duty from 25 per cent to 10 per cent under the East African Community common external tariff, has worsened the situation.
While overall revenues and profits have been rising over the past three years, the Tanzania and Uganda units have been struggling to maintain momentum.
Combined revenues for the tyre maker rose marginally by 7.8 per cent to Ksh3.96 billion ($46.04 million) for the year ending December 2012 from Ksh3.67 billion ($43.2 million) the previous year.
Group profits
The group’s net profits almost doubled to Ksh189.75 million ($2.2 million) from Ksh96.94 million ($1.1 million) during the same period the previous year.
Revenues from the Tanzania subsidiary dropped by 20.6 per cent to Ksh487.27 million ($5.6 million) during the period ended December 2012 from Ksh613.88 million ($7.2 million) in December 2011 while profits attributable to the parent company fell sharply by 40.4 per cent to Ksh11.69 million ($135,885) from Ksh19.62 million ($230,709) over the same period.
In Tanzania, Sameer looks face a new competitor later this year. Tanzania is pumping in over $20 million to breathe life into the defunct General Tyre East Africa, whose production lines stalled in 2009 due to, among other factors, importation of cheap tyres.
Chinese tyres are gaining popularity in several African markets. Many African countries are price-sensitive markets and prefer to import low-priced Chinese tyres rather than the expensive European and American brands.
The Uganda subsidiary saw its revenues remain flat at Ksh253.68 million ($2.9 million) for the period ended December last year, from Ksh252.5 million for the period ended December 2011 while profits rose to Ksh30.36 million ($352,999) from Ksh3.62 million ($42,636).
In its latest annual report, the tyre maker said total revenues from Tanzania and Uganda declined by 16 per cent to Ksh740.9 million ($8.6 million) and that although this translated into a profit, the decline had been due to price competition from cheap imports as well as less than optimal in-country management.
