MISSING GENERAL IN KENYA'S CAR & GENERAL PLC

In the financial year to September 30, 2017, there the general in Car & General (Kenya) Plc did not stand for victorious general in time of war but, regrettably for the vanquished general.

According to audited figures for the year released this week by the managing director, V V Gidoomal, the year ended with lower margins for Car & General in spite of good props from income from non-core transactions and valuations.

For example, Other income rose to Ksh 257.5m from only Ksh 32.5m in 2016 year; and gain from fair valuation of financial assets rose by 49.2% to Ksh 229.5m.

Yet because revenue from core business dropped by 1.03% to Ksh 9635.2m; the growth in total income came to only 1.92% to Ksh 10,122.2m compared to Ksh 9,931.2m in the previous year.

To make matters worse, core revenue drop was not accompanied by decrease in cost of sale. It rose by 0.39% to Ksh 8184.9m from Ksh 8152.8m thus depressing gross profit by 8.39% to Ksh 1450.2m.

From then on, the victorious general withdrew into the shades faster. This was as administration cost rose by 19.1% to Ksh 739.8m; finance cost increased by 2.52% to Ksh 407.6m and distribution expenses stood at Ksh622.4m, up 1.31%.

More blows were to follow: net loss from foreign exchange transactions came to Ksh 61.9m as against Ksh 9.14m profit previously; share of loss recorded by associated company was Ksh 1.22m and joint venture loss took away another Ksh 5.947m.

In the end, Car & General plc could only manage Ksh 98.3m profit before tax for the year compared to Ksh 150.3m in 2016 year.

Management said that the downward trend in the bottom line was due to weaker performance in equipment business in Kenya in particular where liquidity challenges, drought and uncertainty in an election year reigned supreme.

Also, the bottom line was affected by increased provision for doubtful debts and inventory write down.

But business was good in consumer products in Kenya especially as driven by new products launched within the year; in Tanzania, Uganda and Rwanda markets although poultry related business in Tanzania was low.

So, the expectation is that because most of these factors were temporary and in the case of the new products, were just starting their product cycle; the year ahead look brighter more so, as Car & General signed Joint venture agreement with Cummins in March 2017 that should begin to bear fruits in the near future.

Hence, staying optimistic the directors are recommending Ksh 0.60 per share dividend payable to shareholders registered by February 19, this year. The dividend was encouraged more because asset revaluation added Ksh 52.3m book profit to the profit before tax and foreign exchange differences loss deducted Ksh 12.9m leaving Ksh 119.3m as comprehensive profit or income for the year.

CAR & GENERAL (KENYA) PLC: Full year, Ksh m
                                                                  2017                              2016
Total revenue                                         10122.2                            9931.2
Core revenue                                           9635.2                            9735.8
Cost of sale                                             8184.9                            8152.8
Gross profit                                            1450.2                            1583.0
Other income                                            257.5                               32.5
Fair value gain                                          229.5                              153.8      
Distribution and selling                            622.4                              614.3
Administration                                         739.8                               621.3
Finance cost                                             407.6                                392.7
Net forex gain                                           (61.9)                                  9.14
Share of associate company gain               ( 1.22 )                                  ---
Joint venture gain                                       (5..947)                                 ----
Profit before tax                                          98.3                                 150.3
Profit margin           %                                 0.97                                   1.51%

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