Unga Group Plc has become the latest listed firm to sound an alarm that its full year earnings will drop by more than 25 percent. It joins more than 17 firms that have already issued a profit warning.
The slowing economy is taking its toll on corporate firms in Kenya, witnessed by the sharp rise in profit warnings by listed firms.
A statement by Mr Winnifred Jumba, the firm’s Secretary mentioned that based on the unaudited half year earnings, for the six months ended 31st December, 2019, it forecasts that full year profit is likely to be 25 percent less than the prior year.
The firm’s net earnings dropped from KSh 306.3 million in 2018 to KSh 151.3 million while pre-tax profit declined from KSh 437.4 million to KSh 219.4 million.
Unga Group recorded a slight increase in the size of its balance sheet from KSh 10.31 billion to KSh 10.33 billion.
The firm blames its poor financial performance to increased price of maize and wheat grains as well as stiff competition from cheaper dairy and poultry products, especially from neighbouring countries.
Directors have not declared any dividends to shareholders and cite the slow VAT refunds by Treasury as adversely hitting its cash flows.
Unga Group Plc is a Kenya based holding company with investments in milling and manufacturing firms. The companies manufature a broad range of human nutrition products, animal feeds, and animal health products.
At the close of financial year ended 30th June 2019, Unga Group Plc posted a net profit of KSh 544.8 million compared to KSh 783.2 million. Operating profit also fell sharply from KSh 1.3 billion to KSh 718.9 million in 2019.
The firm has seen its volumes and margins come under intense pressure due to competition, especially in the maize and wheat flour business-segments where it has enjoyed monopoly status for years.
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