Eveready East Africa of Kenya to Diversify as Illicit Imports Cause Loss

Eveready East Africa Ltd. (EVRD), the region’s biggest dry-cell battery manufacturer, plans to diversify its product range as it seeks to stem losses resulting from a declining market share and increased illegal imports.

The company also has no plans “right now” to close its only manufacturing plant in Kenya to reduce costs, Margaret Odhiambo, Eveready’s corporate and regulatory affairs manager, said in an interview yesterday. Business Daily, a Nairobi-based newspaper, reported on May 23 that the facility in Nakuru, 140 kilometers (86 miles) northwest of the capital, may be closed in a cost- cutting initiative.

“The board is continuously monitoring the situation in terms of its effects on our business, which may call for other decisions to be made in future which protect all our constituents,” Odhiambo said. “Eveready fully intends to continue to be part of Kenya’s corporate scene.”

Eveready’s market share for size D batteries, which are mostly used to power hand-held torches and radios, has fallen as more Kenyans are connected to the electricity grid and switch to using battery sizes including AA and AAA to power toys and remote controls for television sets, according to Odhiambo. Size D dry cells generate as much 70 percent of the company’s business, she said.

Eveready also faces competition from batteries that have been banned by the Kenya Bureau of Standards because they don’t conform to required standards. The company estimates that about 60 percent of dry-cell batteries are sold illegally.

Diversifying

“We are diversifying, in terms of product and geography,” Odhiambo said. “We changed our articles to allow us to trade more apart from the manufacturing that we undertake in Nakuru, which is ongoing.”

Yesterday, Eveready posted a first-half loss of 54 million shillings ($628,784), compared with a profit of 12.8 million shillings a year earlier. Revenue in the six months through March fell 19 percent to 659.7 million shillings, it said.

Eveready’s problems stem from tax evasion by other battery sellers, the “non-declaration and under-declaration” of imported dry cells for tax purposes and “what we perceive to be dumping of dry-cell batteries into this market,” Odhiambo said.

Eveready’s shares were unchanged today at 2.15 shillings. The stock is the fifth-worst performer on the Nairobi Stock Exchange so far this year, having fallen 28 percent since Jan. 1, according to Bloomberg data.

The company named Jackson Mutua to replace Steve Smith as managing director. Smith leaves the company today, the company said on May 20.

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net.

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