Eveready East Africa issues profit warning

Eveready East Africa, a renowned battery manufacturer, has recently issued a profit warning, anticipating a significant drop in its yearly earnings. Eric Muayen Waki, Head of Business Development at Sterling Capital, shed light on the challenges faced by the company in a recent interview with CNBC Africa. The company's woes have been exacerbated by fierce competition in the market, especially from cheap imports from China and India, which have put a strain on Eveready's revenue growth. Additionally, their overreliance on carbon zinc batteries, primarily targeted at the lower end of the market, has hindered their ability to expand their market share. These batteries, although vital in a country like Kenya with electricity supply challenges, are priced higher than competing products, making them less attractive to consumers. The company's failure to adapt to changing market trends and evolving consumer preferences has further impacted its performance. Despite the closure of their manufacturing plant in 2014, Eveready continues to grapple with the repercussions of policy inadequacies in the country's industrial landscape. The lack of government support and incentives for local manufacturers, as well as the absence of cost control measures, have made it difficult for companies like Eveready to compete effectively. To address these challenges, industry stakeholders urge policymakers to enact reforms that promote competitiveness and support local industries in the face of globalization. While Eveready's Managing Director, Jackson Matura, has made strides in diversifying the company's operations by focusing on distribution and partnering with brands like Clorox, the road ahead remains uncertain. The recent decision to sell a plant in Nakuru, previously deemed overpriced, reflects the company's efforts to streamline its assets and generate liquidity. The strategic sale of the land, valued between 500 million to 600 million Kenya shillings, presents an opportunity for Eveready to reallocate resources and bolster its financial position. The situation with Dubai Islamic Bank's entry into the East African market highlights broader challenges within the banking industry. Delays in securing operational licenses, coupled with regulatory hurdles, have hindered the bank's expansion efforts. However, recent efforts to address governance issues and comply with regulatory requirements signal a positive development for the bank's prospects in the region. As Eveready and other companies navigate a challenging economic landscape, proactive measures and strategic decision-making will be crucial in ensuring long-term sustainability and growth.