Kenya's Uchumi to trade at DSE despite woes

Dar es Salaam Stock Exchange (DSE) has no plans to suspend trading of Kenya's Uchumi Supermarkets at the bourse after the firm closes its operations in Tanzania.

The Kenya-based supermarket a week ago closed operations of its five outlets in Tanzania saying they were making losses for the last five years.

The DSE Chief Executive Officer, Mr Moremi Marwa, said decision not to strike off Uchumi from trading is based on the fact that the firm listed on the Nairobi Stock Exchange (NSE) cross-listed on DSE and Uganda Securities Exchange (USE). 

"We haven't listed five Uchumi supermarket outlets at Dar bourse rather we cross-listed Uchumi as Kenya registered firm.

"The delisting may take effect only if we are advised to do so by NSE," Mr Marwa told Daily News. The CEO said Uchumi wrote a letter to notify them over the decision of closing its outlets in Tanzania and Uganda but that does not change their DSE status.

Mr Marwa said Uchumi said the decision to close its operation in Dar es Salaam as a strategy to eliminate further loss making outlets while turning around the firm from the red. 

"I think it's a good long-term strategy to recoup from loss making, but for short-term it has effects on share price," he said.

The Uchumi share price started to take the toll of the closure of its outlets in Tanzania and Uganda after plummeted heavily in the last 10 days. 

The share listed as USL on DSE plummeted by almost 10 per cent in the last 10 days to 190/-, and the future is gloomy. Uchumi cross-listed 265,426,614 shares last August.

According to reports from Kenya, all Uchumi stores in Tanzania and Uganda would be wound down and it would consider re-entering the two markets in future once the Kenyan operations stabilised.

The supermarkets chain experienced serious difficulties over the last few years which followed the suspension of its three top executives in June. 

Its Tanzania business incurred a net loss of 2.215bn/- for the year ended last June, which was slighter less than the loss of 2.706bn/- reported same period 2013.

"Uchumi has been providing approximately Ksh 200 million (Tsh 4billion) every month to Tanzania and Uganda to enable the two entities meet their financial obligation," Uchumi said in statement published in some Kenyan newspapers.

Before the closures in Tanzania and Uganda, plus two outlets in Kenya, Uchumi had a total of 37 branches. 

It made a pretax loss of 2.54 million US dollars for the half year to December 2014 and in August its full-year earnings were expected to fall by at least 25 percent from the previous year.

Uchumi went into receivership in June 2006 with debts of Ksh 2.2 billion (Tsh 44bn).

The receivership ended on March 2010, after most of the company's debts were cleared and others converted into shares. The company was delisted but resumed trading on the NSE on May 31, 2011.
Source: Daily News, reported rom Dar es Salaam, Tanzania
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