• Car & General's net profit fell to Sh62 million, down from Sh97 million for the six-month period to March 2023.
•Car & General Chairman Nicholas Ng'ang'a said that the tough trading environment across the region as a major factor in its reduced profitability.
Image: FILE
Car & General has reported reduced earnings due to challenging economic conditions and a sharp decline in the motorcycle market, particularly in Kenya.
The company’s turnover for the first half of 2024 reached Sh11 billion, a 3.7 per cent increase compared to the same period last year.
However, an 8.7 per cent drop in sales from its Kenya trading operations, which is a key market, overshadowed the growth.
Sales in Uganda and Tanzania were more positive, growing by 45 per cent and 13.3per cent respectively.
Despite the gains, Car & General's net profit dropped to Sh62 million from Sh97 million reported for the six-month period to March 2023.
Car & General chairman Nicholas Ng'ang'a said that the tough trading environment across the region played a major factor in its reduced profitability.
A 77 per cent drop in motorcycle sales, in particular, has hit the Kenyan market, hard since 2022.
“Our trading operation in Kenya has been specifically affected by a 77 per cent drop in overall market for motorcycles. Since 2022 when market average monthly sales were 20,000 units. Market sales are now 4,000 units per month" said Ng'ang'a.
“This decline is attributed to lower consumer purchasing power, increased fuel costs, and reduced daily profitability for 'boda boda' riders, which has significantly impacted demand,” said
On a positive note, Car & General's acquisition of an additional 50 per cent stake in Cummins in June 2023 has had a favourable impact, with the business now fully consolidated into the company’s financials.
Additionally, the company’s helmet manufacturing subsidiary, Boda Plus, has become EBITDA positive and is expanding its exports to Uganda, Tanzania, DRC, Rwanda, and Burundi.
“The company's diversification efforts, including investments in 2 and 3 wheeler electric vehicles and 3wheeler compressed natural gas vehicles, have been met with a positive market response,” said Ng’ang’a.
The company is optimistic about driving the transition to cleaner energy in these markets with the help of external financing, particularly from its associate, Watu.
Looking ahead, Car & General expects challenging economic conditions to persist, particularly in terms of inflation, forex volatility, and constrained liquidity.
The demand for motorcycles in Kenya is anticipated to remain weak in the near term, but the company is focusing on leveraging the diversity of its business to enhance profitability.
The directors did not to recommend an interim dividend for the period.