KENYA – Kenya’s leading milling company, Unga Group Plc, has seen its full-year profit for the year ended June 2021 grow by three-fold to Ksh.293.5 million (US$2.66m) from Ksh.66.2 million (US$599,000) attained the previous corresponding period.
The 344% rise in earnings, is largely anchored on a 24.8% decline in finance costs to Ksh.150.6 million (US$1.36m) following a restructure of its bank facilities, reports Citizen News.
At the same time, the processing company received payment for grain supplied in support of the government-led subsidy program in 2017.
“The interest element of the debt remains outstanding. The long outstanding tax refunds were also received during the year ending a protracted litigation process. Both receipts improved profit for the year,” the company stated.
Unga’s turnover in the period remained largely unchanged at Ksh.17.8 billion (US$161.09m) from Ksh.17.6 billion (US$159.28m) in 2020, show casing a marginal growth of 1%.
The company’s operating profit increased to Ksh616.2 million (US$5.58m) from Ksh229.8 million (US$2.08m) in June 2020 in what the agricultural holding company said was a reduction in margins, re-organisation and finance costs, while its profit before tax grew to Ksh485.2 million (US$4.39m) from Ksh118 million (US$1.07m) recorded in 2020.
The lower finance costs and steady revenue helped offset rising import/input costs and FX losses from the depreciation of the Kenyan shilling in the period.
In the short term, the firm said performance is expected to remain subdued owing to prevailing high raw material costs especially for wheat and soybean.
The company nevertheless expects its recent forged deal to set the firm on a growth trajectory.
“More value-add partnership opportunities will be pursued while advancing automation opportunities in the base business,” the company added.
At the end of the financial year, Unga entered into an agreement with Nutreco BV to form two joint ventures in Kenya and Uganda, through its subsidiaries Unga Farm Care and Unga Millers, which will expand its aqua-feed business.
Under the agreement, Unga Farm Care, the region’s leading manufacturer and marketer of a broad portfolio of quality animal nutrition and health products, will invest in the establishment of a 50:50 joint venture company in Kenya with the Dutch animal nutrition and aquafeed company, Nutreco.
The parties will further transfer their respective Kenyan aquafeed business and other assets to the new entity.
Meanwhile in neighbouring Uganda, Unga Millers and Nutreco are set to establish a JV company and the partners shall transfer or procure their respective Uganda animal feed and nutrition businesses and other assets.
The giant miller also recently announced the planned sale of Ennsvalley Bakery assets to cold storage and cold chain logistics company, BigCold Kenya.
Both transactions are expected to close by December 31, earning it about Ksh284.5 million (US$2.57m).
Meanwhile, the holding company with investments in flour milling and manufacturing of human nutrition products and animal feeds, is currently undergoing an executive’s restructuring.
The miller has announced the retirement of its long serving Managing Director Nicholas Hutchinson, effective December 31 2021.
He will be replaced by Joseph Malel Choge, CEO of Premier Foods’ CEO, effective December 1 2021.