- Losses swell nearly five times relative to a year ago.
Shares in Eveready East Africa Ltd (NSE:EVRD) pulled back 4.44% on Tuesday to set a new one-year low of Sh2.15. The move followed the company’s posting of unwanted earnings for the half year period ended March 2016. More than 2,000 shares of Eveready changed hands against the stock’s daily average of 5,550 shares.
What happened?
Eveready East Africa Ltd (NSE:EVRD) reported a net loss of Sh58.9 million for its fiscal 2016 first half period. The loss increased significantly over Sh12.4 million reported in the same period a year ago.
The sharp spike in Eveready’s half-year loss came as a result of inventory shortage, according to the management. Eveready depends on international suppliers and it turns out there were changes in the company’s global supply chain that made it difficult for the company to receive enough materials to produce enough goods to satisfy demand. As a result, revenue for the latest half-year period also pulled back nearly 50% relative to the same period last year to come at Sh300 million.
What about the future?
The management of Eveready East Africa Ltd (NSE:EVRD) is upbeat that the future of the company is bright despite recent challenges. Part of the reason for optimism is that the management has been able to fix the supply chain issue that contributed the adverse topline and bottom-line hit in the latest half-year period. Additionally, Eveready is betting on operation diversification to fuel revenue growth in the coming years. For example, the company is planning to expand into household goods business and real estate.
To boost earnings, Eveready East Africa Ltd (NSE:EVRD) has also been attempting to pare costs. The company set its Nakuru factory in 2014, a move that led to steep decline in FY2015 net loss to Sh77.7 million from Sh177.5 million in the prior year.
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