Car & General Limited (Kenya) FY2021 PBT surges by 300% to Shs 887 million

Car & General Limited (CGEN.ke) 2021 Abridged Report

COMMENTARY ON RESULTS

The year to 30 September 2021 was positive in spite of the impact of Covid 19. The Group posted 42% growth in turnover. Overall, sales in Kenya grew 55% and sales outside Kenya grew 22%. Uganda and Tanzania now represent over 35% of Group sales. Our two-wheeler (“boda boda”) and three-wheeler (“tuk tuk”) businesses experienced reasonable growth. Our equipment businesses (namely tractors, construction equipment and forklifts) also grew particularly Doosan

As a result of the above, turnover for the year ended 30 September 2021 was Shs 17.1 billion against Shs 12.1 billion achieved the previous financial year. EBITDA (Earnings before interest, tax, depreciation and amortization) grew by 100% to Shs 1.8 billion from Shs 936 million. Profit after tax over the same period was Shs 887 million which is over 300% higher than Shs 274 million made during the same period last year. Profitability was significantly impacted by demurrage losses of Shs 103 million resulting from global logistical issues and localization of production. Our cashflow was negatively impacted by supply chain issues, resulting in higher levels of paid-up stock to the tune of Shs 1.4bn.

Covid persisted during the year and the Group focused on creating a safe environment for our employees and customers. We encouraged the adherence to all social protocols including working from home, social distancing, provision of masks and other personal protective equipment. In our finance business, we lengthened loan tenors to reduce daily payments. In addition, we have worked with our Boda Boda and Tuk Tuk clients to improve driver skills and passenger safety in conjunction with St John Ambulance Brigade.

The highlight of the financial year was the volume in our onsumer businesses particularly in two wheelers and three wheelers in both Kenya and Tanzania. Our equipment business also stabilized. We now offer a complete range of specialized engine related products (both consumer and equipment) through a solid distribution network and are making good progress in achieving significant market shares in each segment.

Our investment in Watu Credit is also performing well and driving growth in the consumer segment. In addition to Kenya, Watu has now established operations in Uganda, Tanzania and Sierra Leone. The contribution from Watu to the Group’s net profit was significant.

Our investment property business saw a valuation gain of Shs 12 million this year given challenging current market conditions. Due to declining footfall resulting from Covid and the development of the Nairobi Expressway, we have supported our tenants at Nairobi Mega, on Uhuru Highway through concessions on rent. We continue to review the property portfolio to ensure it generates satisfactory returns.

In order to support the Government’s localization initiatives and create industrial employment, during the year we opened Boda Plus, our helmet manufacturing business. Production commenced in September 2021. This is the first of its kind in East and Central Africa. In addition, we have worked with manufacturers to produce six parts locally to support our assembly process. We now employ over 3000 people as a Group (including associates). We employed over 1000 additional people in 2021.

Going forward, we believe uncertainty will persist in 2022 given the upcoming elections in 2022 and the continuing impact of Covid 19 on the business environment. We will continue to encourage the safety of our people and customers. Key to success will be higher efficiency levels in all areas of our business, maintaining market share in core products and achieving satisfactory profitability across all businesses. We have made all necessary manpower and infrastructure investments – we now need to continue to grow volume and market share on an efficient base.

We are well positioned to deliver on our Triple P bottom line – People, Planet and Profit. We are already having a significant impact on millions of lives in terms of delivering daily livelihoods and entrepreneurship opportunities. We will now be focusing more energy on electric vehicles and we intend to launch electric three wheelers in February. We are working hard with our suppliers to develop fit for market two wheelers. With our symbiotic relationship with Watu, we can play a significant role in transforming the twowheeler and three-wheeler market towards electric. This will play a positive role in alleviating climate change over the coming years.

The accounting policies and methods of computations followed in the preparation of these financial statements are the same as those used in preparation of the annual financial statements for the previous year.

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