Diversified retail group Car & General (C&G) reported a 36% increase in half-year net profit as sales improved in its East African markets.
The company, which engages in a variety of businesses including poultry, property investments and the sale of motorcycles, posted a net profit of Sh629 million for the six months to March 2022, compared to Sh461 million for the similar period. from last year.
Revenue jumped by nearly a quarter to 10 billion shillings from 8 billion shillings a year earlier.
“Our trading activities, particularly in Kenya and Tanzania, have seen good revenue growth but with reduced margins. Our business operation in Uganda has been stable,” C&G Chairman Nicholas Ng’ang’a said in a statement on Wednesday.
C&G cited global supply chain constraints, which have led to price increases and longer lead times for reduced margins.
“This has been exacerbated by a gradual devaluation of the Kenyan shilling which has also led to currency losses.” The company recorded foreign exchange losses of 16 million shillings.
C&G says its poultry business in Tanzania has seen significant growth, as well as its lending arm Watu Credit. The microlender finances the acquisition of the two- and three-wheeled cars, including brands such as TVS motorcycles and Piaggio tuk-tuks, which it assembles.
The company says it also benefited from leasing the Nairobi Mega property, along the Uhuru highway, to supermarket chain Carrefour in June 2020. Carrefour replaced former occupant Nakumatt Holdings, which went bankrupt and then been liquidated.
The listed company said its dispute with the Kenya Revenue Authority is still ongoing after the Inland Revenue appealed a ruling in its favor by the Tax Appeals Tribunal over 677 million kra shillings, because the unpaid tax has accumulated over six years ending in 2020.
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The board of directors has not recommended the payment of an interim dividend.
The company says that while its diversification pays off, it expects uncertainty for the rest of the year.
“Given the logistical challenges and the upcoming election in August, the next six months seem predictable across all lines of business. There are additional challenges in the form of fuel shortages, forex devaluations, inflation and rising interest rates,” C&G said.
“We will focus on growing market share, controlling costs, preserving cash, protecting margins and increasing working capital efficiency.”