The Miller also recorded a decline in revenue to KSh 8.8 Billion last six months of 2021 compared to KSh 9.7 Billion over a similar period in 2020. Operating profit also declined from KSh 217.9 Million to KSh 79.3 Billion during the period under review.
The Group made a pre-tax loss of KSh 16.7 Million from a pre-tax profit of KSh 122.5 Million over second half of 2020.
The firm’s profitability as measured by Earnings per Share(EPS) declined to KSh 0.003 in H2, 2021 from KSh 0.63 in H2,2020 while its balance sheet size grew to KSh 9.9 Billion in H1, 2021 to KSh 9.8 Billion in H1, 2020.
Cash generated from operations went into negative KSh 319.4 Million from a positive of KSh 266.9 Million in H2, 2020.
The firm says its revenue declined 9% over same period prior year due to reduced sales volumes in both human and animal nutrition segments.
Profit before tax was impacted by revenue decline and depressed margins due to a surge in cost of key raw materials attributable to global shortages, rise in freight cost and a weakened Kenya Shilling.
Wheat grain price increase and shortage were because of adverse weather, pandemic related interruptions and increased global demand.
Maize supply and prices were stable in the first quarter. However, a poorer than expected harvest in the second quarter created shortages and an increase in prices.
A global shortage of soya bean pushed prices to unprecedented levels. The reduction in local demand for flour has meant that by-products used in animal feeding have been in relatively short supply. The firm said it turned to imports from the region to bridge this gap.
Though the government has allowed duty-free importation of non-GMO raw materials, Unga Group Plc said the high global prices have not made importation a viable option yet.
Initiatives to improve the firm’s market reach and drive operational efficiencies continued to gather momentum.
Cash flow constraints experienced in the trade meant tightening the firm’s credit risk policy to avert bad debts.
Opportunities in new product lines and partnerships continued to be explored. The necessary investments were and continue to be made to bring these on-going initiatives to fruition.
In its Outlook, Unga Group Plc warns that raw material prices are expected to remain high for the rest of the financial year. This may worsen the already soaring human food and animal feeds price situation.
Delayed VAT refunds continue to strain cash flows, made worse by an increase in working capital requirement to cover higher material prices.
“We continue to lobby for sustainable raw material solutions through policy changes such as approval of GMO raw materials especially for animal feeds.The Board and management are working on strategies to counter the existing challenges,” said the firm
The Directors do not recommend payment of an interim dividend.
ALSO READ: Unga Group Plc Half-year Earnings drop 44.8% to KSh 83.5 Million
Unga Group Plc, a listed miller, recorded a substantial decline in six months ended 31st December 2021 net profit to KSh 8.5 Million in 2021 compared to KSh 83.5 Million over a similar period in 2020.
The Miller also recorded a decline in revenue to KSh 8.8 Billion last six months of 2021 compared to KSh 9.7 Billion over a similar period in 2020. Operating profit also declined from KSh 217.9 Million to KSh 79.3 Billion during the period under review.
The Group made a pre-tax loss of KSh 16.7 Million from a pre-tax profit of KSh 122.5 Million over second half of 2020.
The firm’s profitability as measured by Earnings per Share(EPS) declined to KSh 0.003 in H2, 2021 from KSh 0.63 in H2,2020 while its balance sheet size grew to KSh 9.9 Billion in H1, 2021 to KSh 9.8 Billion in H1, 2020.
Cash generated from operations went into negative KSh 319.4 Million from a positive of KSh 266.9 Million in H2, 2020.
The firm says its revenue declined 9% over same period prior year due to reduced sales volumes in both human and animal nutrition segments.
Profit before tax was impacted by revenue decline and depressed margins due to a surge in cost of key raw materials attributable to global shortages, rise in freight cost and a weakened Kenya Shilling.
Wheat grain price increase and shortage were because of adverse weather, pandemic related interruptions and increased global demand.
Maize supply and prices were stable in the first quarter. However, a poorer than expected harvest in the second quarter created shortages and an increase in prices.
A global shortage of soya bean pushed prices to unprecedented levels. The reduction in local demand for flour has meant that by-products used in animal feeding have been in relatively short supply. The firm said it turned to imports from the region to bridge this gap.
Though the government has allowed duty-free importation of non-GMO raw materials, Unga Group Plc said the high global prices have not made importation a viable option yet.
Initiatives to improve the firm’s market reach and drive operational efficiencies continued to gather momentum.
Cash flow constraints experienced in the trade meant tightening the firm’s credit risk policy to avert bad debts.
Opportunities in new product lines and partnerships continued to be explored. The necessary investments were and continue to be made to bring these on-going initiatives to fruition.
In its Outlook, Unga Group Plc warns that raw material prices are expected to remain high for the rest of the financial year. This may worsen the already soaring human food and animal feeds price situation.
Delayed VAT refunds continue to strain cash flows, made worse by an increase in working capital requirement to cover higher material prices.
“We continue to lobby for sustainable raw material solutions through policy changes such as approval of GMO raw materials especially for animal feeds.The Board and management are working on strategies to counter the existing challenges,” said the firm
The Directors do not recommend payment of an interim dividend.
ALSO READ: Unga Group Plc Half-year Earnings drop 44.8% to KSh 83.5 Million
