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Upbeat Uchumi returns to bourse

NAIROBI, Kenya, May 31 – Uchumi Supermarkets’ share will on Tuesday re-list at the Nairobi Stock Exchange, with the retail chain’s management upbeat that the shares could trade higher than Sh17.20.

Uchumi Supermarkets Chief Executive Officer Jonathan Ciano on Monday said the company’s share price had been appreciating from 2008, when it raced back to profitability.

Mr Ciano said that in 2008 the Uchumi share was valued at Sh17.20 adding that it could have advanced by as much as Sh6.50 to date.

“Since then we have earned Sh863 million in profits and in 2008 shareholders and the government have injected Sh857 million. What we estimate is that every share price value has increased by not less than Sh6.50,” Mr Ciano said. 

Having last traded at Sh14.50 when it was de-listed from the bourse in 2006, the return after a five-year hiatus is likely to create a buzz come opening day. Mr Ciano however stressed that market movements would be the ultimate determinant of how the share trades.

The CEO called on shareholders to be patient with the company and not dump their shares soon after re-listing, arguing that the company was destined for better returns.

“What urgency is there? You waited for five years as a shareholder. Are you telling me you do not want to go for more shares? Today if anybody says they want to dump a share they would be so misled,” Mr Ciano stressed.

Over the years, the supermarket chain has also returned on the profitability path and even managed to pay its debtors.

The firm was put on statutory management in 2006, freezing investments for thousands of Kenyans. The long absence has meant a lot of suffering for its investors and a huge opportunity cost.

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During the period, the chain saw its shares increase from 180 million to 266 million as a result of the conversion of debentures into equity.

Uchumi was lifted out of receivership in March 2010 and in August of the same year, announced a 154.7 percent rise in its consolidated pre-tax profit to Sh433 million for the financial year ended June 30 2010; a performance it expected to replicate in 2011.

Mr Ciano said the company was now profitable after most of its branches posted profits that totaled Sh1.37 billion last year. The gross sales in 2010 increased to Sh9.75 billion from Sh8.6 billion registered the previous year.

Mr Ciano said the company had been reducing its operating expenses from 43 percent in 2006 to about 16.4 percent currently.

Mr Ciano said the time away from the NSE had opened up the company to new opportunities that it intends to capitalise on grow its business.

With a network of 15 branches, Uchumi is scheduled to open more outlets in Kenya, Uganda and even its first shop in Dar-es-Salam, Tanzania.

Follow the author at https://twitter.com/MjKaranja

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