Uchumi sustains the profit path

August 12, 2010
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, NAIROBI, Kenya, Aug 12 – Uchumi Supermarkets has announced a 154.7 percent rise in its consolidated pretax profit to Sh433 million for the financial year ended June 30.

The growth was attributed to increased sales volumes coupled with operational efficiency which chairman Eng Abdulrazak Aden lauded as in line with the retail chain’s rescue plan.

“This result is commendable considering the stiff competition in the sector. The growth was boosted by our focus on key strategies of customer service, maximisation of sales revenues, cost management and recapitalisation,” said Eng Aden, who’s also the Trade Permanent Secretary.

Net sales grew by 16 percent from Sh8.2 billion in the corresponding period last year to Sh9.6 billion with the gross profit rising to Sh2.1 billion up from Sh1.7 billion in the period under review. The chain’s total net profit which is inclusive of deferred tax of Sh431.9 million amounted to Sh865 million.

“Because of the recovery that we have achieved from the technical financial perspective of the International Finance Reporting System, we were able to realise a tax credit of Sh432 million compared to Sh250 million for last year,” the Chief Executive Officer Jonathan Ciano explained.

The profit, which is the third in a row, and the injected equity have helped to reverse the chain’s negative equity into positive shareholders’ worth.

The Sh675 million injected by the government into the chain in 2006 to rescue it from collapse, coupled with monies raised from its suppliers and debenture holders has seen shareholders’ fund grow from a deficit of Sh1billion to a positive of Sh1.5 billion.

Mr Ciano said the performance further strengthens the chain’s standing with the Capital Markets Authority (CMA) which is currently reviewing its application to have its shares re-listed on the Nairobi Stock Exchange.

Asked whether they were concerned that CMA seemed to be taking so long in its review, the CEO added that the authority was just following the requisite procedures and would give them the green light to go back to the bourse in its own time.

“We have forwarded our application to CMA which has its own rules and regulations that they are going through. The shareholders have waited four years without being in the market, I would request the board to give the authority time to go through the process,” Mr Ciano appealed.

Uchumi has been on a profitability path for the last four years, a recovery that has seen it being able to consistently meet its financial obligations to its debtors and pay its supplies on time.

With a customer base of 18 million, the chain operates 15 branches and is soon scheduled to open its first branch in Dar-es-Salam, Tanzania.

This will go a long way in enabling the supermarket to attain its plan of cross listed its shares in all the East African bourses.

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