Unga Group Plc, the only listed miller at the Nairobi Securities Exchange(NSE) sunk deeper into loss territory, with a net loss of KSh 341.6 Million for the half year ended 31st December 2023 from a net loss of KSh 131.3 million over a similar period in 2022.
- Unga Group’s balance sheet size also shrunk to KSh 10.9 billion in H1 2023 from KSh 12.8 billion in H1 2022.
- The listed miller saw its revenue rise marginally from KSh 12 billion to KSh 12.4 billion while its operating profit was down to KSh 32.2 million from KSh 105.5 million.
- Unga Group’s Board of Directors attributes the 3% increase in revenue to higher volumes, coupled with adjustments in prices aimed at partially offsetting the rise in raw material costs.
Profitability for this period was negatively affected by the high input costs. There has been a local supply deficit resulting in increased importation at increased raw material and shipping expenses. The miller’s finance costs also increased to KSh 492.9 million in the first six months of 2023 from KSh 112.3 million in H1 2022.
The sharp depreciation of the Kenyan Shilling caused major foreign currency exchange losses, putting further pressure on working capital. Margins remained strained while borrowing costs remained elevated as interest rates increased. Looking ahead, the miller said the US dollar exchange rate and liquidity have shown improvement. However, should foreign currency exchange risk persist, it will potentially influence the costs of the firm’s imported raw materials and thus impact the overall cost of Unga products.
Demand for finished products remained subdued as affordability by consumers continued to be affected by macro and micro economic factors. Unga Group said it continues to work on cost management and efficiency initiatives. In line with its sustainability strategy, the installation of solar is nearing completion, with three out of five sites now completed and commissioned.
