Sameer Africa Ltd has said it will close its manufacturing plant in Kenya as it reels from the effects of cheap tyre imports.
In a statement, Allan Walmsley, managing director, which also issued a profit warning, said it will close shop from September 30 after approval by Capital Markets Authority.
According to the Star, the listed tyre maker will now commence offshore production by manufacturers in China and India.
“As a result, the company will incur a one-off charge in respect of plant and inventory impairment and employee severance costs estimated at approximately Sh725 million,” Walmsley said Thursday.
“The earnings for the current financial year are therefore expected to be lower by more than 25 per cent of the earnings reported for the same period in 2015,” he added.
Reduced custom duties for tyre imports, high energy costs and underutilisation of factory capacity have also adversely impacted the business and will result in job losses, stated the MD.
He, however, assured of the firm’s continued supply of tyres in the country.
"We will also continue expanding our Summit Tyre offering for all markets and we will continue to distribute Bridgestone tyres in Kenya, Tanzania and Uganda,” he added.