Popular flour miller; Unga Group Plc, has been hit by a harsh decline in its end of the year earnings.
The publicly listed company blamed the drop on supply hitches in its raw materials, a reduction in consumer demands, disruption in the hospitality and travel sectors, and the weakened Kenyan Shilling.
Unga Group has also battled with increases in wheat prices on the global scale and maize prices, in addition to weather conditions that have not been the best.
Its animal nutrition side was also affected as a result of a low rise in farm inputs as farmers in Kenya went through tough competition from the importation of more affordable eggs, milk, and meat from countries like Uganda which resulted in the prices in Kenya getting pushed down.
Unga Group Plc’s bakery arm also recorded a decline in revenues due to very stiff competition in retail.
With regards to shares the company was part of the small cap counters which drew the attention of chancy investors at the bourse as it appreciated by 6.49 percent to 32 Kenyan Shillings.
Its net earnings for the year which ended on the 30th of June 2020 saw a staggering drop to 66.2 million Kenyan Shillings from the impressive 544.8 million Kenyan Shillings net profit achieved in 2019.
While its revenues registered an increase of 2 percent from 17.9 billion Kenyan Shillings, to 18.3 billion Kenyan Shillings the money generated from Unga Group Plc’s operations saw a drop from 1.4 billion Kenyan Shillings to 868.9 million Kenyan Shillings.
The company’s balance sheet however grew from 10.6 billion Kenyan Shillings recorded in 2019 to 12.1 billion Kenyan Shillings.
Its profitability measured by Earnings Per Share (EPS) went down from 4.52 Kenyan Shillings to 43 cents.
The company is however, still quite optimistic about what the future holds.
The Company Secretary of Unga Group Plc; W. Jumba said, “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.”
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