Unga Group Plc, a listed flour miller recorded a sharp drop in end-year earnings. The firm attributed the decline to a fall in consumer demand, raw materials supply disruptions, a weakening Kenya Shilling as well as reduced travel and hotel business.
Unga Group also faced with high maize and wheat prices, occasioned by unfavourable weather and a rally in wheat prices on the global market.
The animal nutrition business was affected negatively by low uptake of farm inputs. This is due to local farmers facing stiff competition from cheaper meat, milk and egg imports, especially from neighboring Uganda, pushing down local prices.
The bakery business suffered a fall in revenues due to aggressive competition in the retail sector.
Its shares were among the small-cap counters that attracted the attention of speculative investors at the bourse yesterday, appreciating by 6.49% to KSh 32.00.
The listed grain miller’s net earnings for the year ended 30th June, 2020 declined to KSh 66.2 Million from KSh 544.8 Million net profit recorded in 2019.
Unga Group’s revenues increased by 2% from KSh 17.9 Billion to KSh 18.3 Billion, while cash generated from operations declined from KSh 1.4 Billion to KSh 868.9 Million.
The miller’s balance sheet grew to KSh 12.1 Billion from KSh 10.6 Billion posted the previous year with its profitability, measured by the Earnings per Share(EPS) falling to 43 cents from KSh 4.52.
A household brand of yesteryear, Unga Limited is cautiously optimistic about its future.
“In the current tough economic environment, the recovery of our business is largely dependant on healthy cash flows. There is a need to preserve cash and we, therefore, do not recommend the payment of any dividend,” said W. Jumba, Unga Group Plc Company Secretary.
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