Flame Tree Group has posted a KSh90.6 million loss after tax for the 6 months to June 2024, attributed to high financial costs and surging operational expenses.
- The sharp decline is a reversal from the KSh6.8 million profit after tax recorded in the same period 2023.
- Revenue went down 1.3 per cent to KSh2.09 billion compared to KSh2.13 billion recorded in the same period 2023.
- This was mainly driven by a 6 per cent decline in the cosmetics, snacks and spices segment caused by production and export disruptions caused by the floods in Nairobi.
However, the plastics, water and sanitation segment were a key revenue driver, posting a 13 per cent growth due to continued investment in capacity expansion and market penetration.
EBITDA was KSh164.2 million, an 18% decline from the previous year which the company attributes to lower-than-expected sales stemming from inflation-driven overhead costs, floods and political unrest.
On the upside, gross margins increased to 36.5 percent, up from 34 percent in H1 2023, driven by favorable raw material prices and the appreciation of the Kenyan Shilling.
“Our efforts to manage the Financial challenges from 2022 have been critical in maintaining our operations. As we work through the debt restructuring, we remain focused on optimizing our resources to drive growth and capitalize on new market opportunities.” Mr. Heril Bangera, CEO of Flame Tree Group, commented.
In 2022, Flame Tree Group increased its borrowing significantly to finance raw material purchases, responding to a sharp rise in prices.
“While this was crucial for maintaining production levels, it also led to higher finance costs, which have constrained cash flow and limited growth opportunities,” Flame Tree Group said in the earnings statement.
As part of its broader financial strategy, the Group is currently engaged in a debt restructuring process aimed at optimizing its financial structure and enhancing cash flow flexibility.
Flame Tree Group, manufacturer and distributor of a diversified portfolio of products across Africa, with operations in Kenya, Rwanda, Ethiopia, Mauritius, Mozambique, and UAE.
The firm, which is listed at the Nairobi bourse under the ticker symbol FTHG, closed the previous trading day at KSh1.02, a year-to-date loss of 1.9 per cent.
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