Posted on March, 5, 2019 at 09:29 am
By ELIZABETH KIVUVA
Unga Group expects to post 25 per cent lower net earnings for the 2018/19 financial year compared to the previous year.
This will push its profits to Sh587.4 million or less, the financial statements show.
In the financial year ended June 2018, the listed company returned to profitability with net profit hitting Sh783.2 million compared to Sh7.04 million loss incurred in the same period last year. Unga revenues rose by 2.3 per cent to stand at 19.98 billion in the period.
“Based on the company’s unaudited financial results for the six months ended December 2018 and the second half forecast, profit for the full year is likely to be at least 25 per cent,” the firm stated in their 2018 half year results.
“With the prevailing depressed demand for flour, the second half of the year ending June 2019 will continue to be challenging. Moreover, the full year results are expected to be significantly lower than prior year. The board will continue to apply strategies to ensure best performance under the circumstances.”
Unga group reported Sh306.28 million profit for the six months ended December, 40 per cent less compared to Sh511.13 million made in the same period in 2017. Revenue for the period declined to Sh9.03 billion from Sh11.07 billion over the same period.
The group attributes this to decline in human nutrition business due to increased competition and depressed consumer demand.
“Animal nutrition business recorded improved performance, while bakery business met the company’s expectations,” it added.
Unga has commended an improvement in capacity and efficiencies to 300 tonnes per day since commissioning of wheat milling new plant in Eldoret in December.
The soybean meal plant installation is underway at Dakar road, to be complete by end of this financial year.
In July 2018, market participants told Reuters that Unga faced growing competition from unlisted companies, hence the need to take it private and operate on a similar footing.
At the time, Seaboard Corporation failed to buy out minority shareholders at Unga Group.
The bid if successful would have seen the US firm privatise the food processing company and delist it from Nairobi Stock Exchange.
Seaboard sought to buy 50.93 per cent stake in Unga with a backing of shareholders controlling a total 69.9 per cent equity. However, it failed due to lack of at least 75 per cent as required by NSE delisting rules.
Source: The Star