KENYA – Mumias Sugar Company’s sales in the six months to December 2018 dropped by 96% to Sh25 million (250000) from US$6.8 million (Sh680m) recorded in a similar period the previous year.
The miller attributed the decline to lack of products for sale during the period following shutdown of its production line between July and December, reports Business Daily.
However, the sugar company managed to reduce its net loss for the period to 15.12 million (Sh1.53bn) from US$19.5 million (Sh1.95bn) reported in the previous year, attributed to reduced costs.
The company said that earnings were negatively impacted during the review period due to reduction in sugarcane supply, which provides over 80% of its earnings, that saw the firm halt its operations.
The company, which also operates a power plant, did not export power to the national grid, hence missing out on earnings from the additional revenue stream despite resuming electricity sale to Kenya Power after renegotiated a new power purchasing agreement.
Mumias Sugar, according to its report, generated revenues from the sale of ethanol stocks that were carried over from the previous financial year as well as disposals where it made US$43 million (Sh4.3 billion).
With the shortage of cane, Mumias is now banking on ethanol to survive in the wake of a serious financial woes.
“Board and management are optimistic that there will be improved performance in the second half of the year through the production of extra neutral alcohol…,” the firm says.
The Nairobi Stock Exchange listed firm sunk into insolvency to the tune of US$60 million (Sh6 billion) after making further losses that saw its total liabilities surpass the total assets in the year ending June 2018.
In addition, the state-owned miller saw production fall by 100% in the first two months of the year compared to other private sugar millers who registered the most improved output in January and February 2019.
This comes at a time when the government plans of its sugar to sell a 51 per cent stake in Sony, Chemelil, Nzoia, Muhoroni and Miwani companies to investors and reserve 24 percent for farmers and employees by July.
The government will then sell a remaining 25 percent stake in the milling companies in an initial public offering once the factories are profitable.