Car & General, an automotive dealer in Kenya, has warned that its profit for the 15 months ending December 31, 2023, will drop by more than 25 per cent compared to the previous year.
This is due to foreign exchange losses, lower motorcycle sales, higher finance costs, and demurrage costs in Tanzania.
“The drop in the Group’s performance is mainly attributed to a combination of factors, including foreign exchange losses on US exposers resulting from a significant strengthening of the US dollar.”
The company changed its financial period to December 31, as approved by the shareholders at the 2023 Annual General Meeting (AGM) on March 23, 2023.
The next audited financial statements will cover the 15 months ending December 31, 2023, the company said in a statement.
Car & General attributed the expected profit decline to several factors, including:
- Foreign exchange losses on US dollar exposures in Kenya amounted to Ksh301 million in the financial year ended September 30, 2022.
- A deterioration in the unit economics of motorcycles negatively affected motorcycle sales in Kenya.
- An increase in finance costs, which rose by 17 per cent to Ksh263 million in the financial year ended September 30, 2022.
- Demurrage costs in Tanzania, which resulted from global logistical issues and localization of production. These costs were Ksh139 million in the financial year ended September 30, 2022.
The company’s profit after tax dropped by 23 per cent to Ksh679 million in the financial year ended September 30, 2022, from Ksh887 million in the same period in 2021.
Car & General’s board remains optimistic that performance will improve in 2024, given the diversity of its businesses in Kenya and across the region.
Car and General started 2023 with a share price of Ksh 47.45, but it has lost 42.3 per cent of its value since then, ranking 58th on the Nairobi Securities Exchange (NSE) in year-to-date performance.
However, CGEN shareholders may be relieved by the 7% rise in its share price since October 3rd, which is the fifth best on the NSE.
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