NAIROBI, May 30 (Reuters) - Kenyan car retailer CMC Holdings posted a 59 percent drop in half-year pretax profit, blaming it on low demand in the period before the east African country’s presidential elections in early March.
The firm, which has exclusive distribution rights for Ford in local and regional markets, said profit fell to 221 million shillings ($2.6 million) in the six months to March 31.
“High interest rates in 2012 and elections in Kenya in March 2013 constrained the growth of businesses,” CMC said in a statement, adding that it expected better performance in the second half due to declining interest rates in the market.
Falling rates after the broadly peaceful vote on March 4 would increase consumer purchasing power in the region’s biggest economy and buoy its business, the company said.
Kenya’s central bank has cut its key interest rate by 950 basis points to 8.50 percent since it adopted a monetary easing stance in July 2012, giving commercial banks room to ease their lending rates, which could drive demand for consumer goods.
“The peaceful post-election environment should also create the right atmosphere for improved business for the remainder of the year,” the company said.
Kenya descended into violence following a disputed presidential election result in 2007.
CMC, which lost an exclusive distribution contract for the Land Rover brand, did not say if this loss had an impact on its revenues. The distribution deal was terminated in February.
Analysts said CMC’s revenue would take a hit in the course of the financial year after the loss of the distribution rights.
The company’s stock is still not trading after the Capital Markets Authority suspended it in September 2011 due to a boardroom row.
$1 = 84.9500 Kenyan shillings Reporting by Kevin Mwanza; Editing by James Macharia and Helen Massy-Beresford