Government regulations take a toll on Car and General financials

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Car and general have released a year’s financial results before tax showing a profit of 150 million which is 85% higher than Kshs 81m made during the same period last year.According to the company, net profit attributable to shareholders increased to Kshs 89m from Kshs 31million. The earnings per share increased from Kshs 0.76 to 2.22. The improved profitability resulted from the stability of the exchange rate.

The company says the period saw a Turnover for the year ending September 2016 being  Kshs 9.7 billion. This was similar to Ksh 9.9 billion achieved the previous financial year. The gross profit was similar to the previous year.

The company has faced challenges in the country with decreasing volumes in their consumer business; which is mainly two-wheelers and three-wheelers, being curtailed by government regulations.

These regulations include excise duty on two-wheelers and a Mombasa County ban on three wheeler registrations between December and March. However, the company’s  generator businesses continued to grow with growth in its other equipment businesses (construction, tractors, and forklifts) being limited by the prevailing high-interest rate regime coupled with the subsequent cap on interest rates.

Notwithstanding, the new product lines, namely Doosan construction equipment, Kubota tractors, Toyota forklifts and MRF tyres are gaining traction and will provide more balance to the business going forward.

 “Trading conditions this financial year are unpredictable given elections, current risk aversion, and constrained liquidity conditions. Our focus will be on limited growth and operational efficiency”.  said Vijay Goddomal, Group Managing Director, Car and General

He added that in view of the lack of growth during the year and increased working capital requirements, the directors have resolved not to recommend a dividend to shareholders at the Annual General Meeting to be held on 22nd March 2016.

Car & General is a holding company that deals in the sales, service, and spares of automotive and engineering products, with some of the leading brands in cars, motorbikes, three wheelers, outboards, brake linings and pads, spark plugs, small petrol engines, air compressors welding alloys and equipment, laundry machines and diesel power generators in East Africa.

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Melissa Daniels
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