A drop in sales in Kenyan trading operations has contributed to a decline in Car & General’s net profits from about KShs. 96.7 million recorded in 2023 to KShs. 62.4 million in the six months ended 30 June 2024.
- The trading operations in Kenya have been specifically affected by a 77 per cent drop in the overall market for motorcycles since 2022 when market average monthly sales were 20000 units to 4000 units per month today.
- While sales in Kenya have seen a significant drop in volume and profitability, sales in Uganda have grown by 45% and in Tanzania by 13.3%.
- The company says it has been a challenging period for trading operations, with profit before tax hitting Ksh 106m in the first-half compared to Ksh 126m the previous year.
“Motorcycle purchases continue to be affected by lower consumer purchasing power which has reduced the daily utilization of ‘boda boda ‘and consequently the daily unit profitability (especially given higher fuel costs) has deteriorated leading to lower levels of overall demand,” noted Charles Nganga, Car and General Chairman.
Car & General is less optimistic about the future saying it expects challenging economic conditions due to inflation, forex fluctuations and constrained liquidity to affect motorcycle demand. The company is however optimistic of improvements in business for other product lines.
The Cummins Acquisition
It says the acquisition in June 2023 of 50 per cent additional shares in Cummins has had a positive impact and the performance of this business is now fully consolidated. Cummins C&G Holdings main commercial activities are the distribution of power generators and diesel engines, maintenance of power equipment, and sale of filtration equipment and coolants.
The mid acquisition mid-last year came at a time when Kenya’s power generator market is expected to expand following different projects across the country such as the growth of Special Economic Zones (SEZs), government-backed infrastructure projects, including technology cities and expansion of roads.
Additionally, the growing telcom sector, rising manufacturing industries as well as expansion of business parks is expected to further spur market for diesel generators.
