Car & General (C&G) has reported a significant decline in net profit for the first half of 2024, primarily due to increased operational expenses and a weaker market for motorcycles in Kenya.

The company's profit for the period dropped by 35.4 per cent to Sh62.5 million from Sh96.6 million a year earlier.

Despite a modest 3.7 per cent growth in revenue to Sh10.9 billion, rising costs, including finance and operating expenses, outpaced the increase in sales.

Operating and administrative expenses surged by 16.5 per cent to Sh1.05 billion, driven by factors such as higher salaries, rent, and utilities.

Meanwhile, finance costs jumped by nearly 50 per cent to Sh586.8 million.

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Additionally, the company incurred a higher tax charge of Sh44.02 million, representing 41.3 per cent of profit before tax.

The automotive and equipment distribution segment, which accounts for a significant portion of C&G's business, was particularly impacted by the decline in motorcycle sales in Kenya.

the company's operations in Uganda and Tanzania saw growth, the overall market for motorcycles in Kenya has contracted by a substantial 77 per cent since 2022.

To mitigate the challenges, C&G is focusing on strategies such as reducing inventory levels, expanding aftermarket sales, and improving operational efficiencies.

However, the company acknowledges that the subdued motorcycle market in Kenya is likely to persist for the foreseeable future.

Despite the challenges in the automotive segment, C&G's other businesses, including property investment, financial services, poultry, and helmet manufacturing, have shown resilience.

The company's investment properties, such as the Nairobi Mega shopping mall, have continued to attract high footfall, and its micro-lending unit, Watu, has expanded its reach through mobile phone financing in several African countries.

As C&G navigates the current economic landscape, it will be crucial for the company to effectively manage costs, diversify its revenue streams, and adapt to changing market conditions.