Covid-19 Bites Into Unga Group's End-Year Earnings

Kevin Namunwa | Sep 25, 2020

Listed flour miller, Unga Group Plc, has recorded a sharp drop in its end-year earnings after facing challenges occasioned by the coronavirus.

The firm attributed the decline to a fall in consumer demand, raw materials supply disruptions, a weakening Kenya Shilling as well as reduced travel and hotel business.

Unga Group also faced heightened maize and wheat prices because of unfavourable weather and a rally in wheat prices on the global market.

The company’s animal nutrition business did not also perform well during the coronavirus pandemic period.

This is due to local farmers facing stiff competition from cheaper meat, milk and egg imports, especially from neighbouring Uganda, pushing down local prices.

On the other hand, the bakery business also suffered a fall in revenues due to aggressive competition in the retail sector.

Its shares were among the small-cap counters that attracted the attention of speculative investors at the bourse yesterday, appreciating by 6.49% to Ksh 32.00.

The listed grain miller’s net earnings for the year ended 30th June, 2020 declined to Ksh 66.2 Million from Ksh 544.8 Million net profit recorded in 2019.

Unga Group’s revenues increased by 2% from Ksh 17.9 Billion to Ksh 18.3 Billion, while cash generated from operations declined from Ksh 1.4 Billion to Ksh 868.9 Million.

The miller’s balance sheet grew to Ksh 12.1 Billion from Ksh 10.6 Billion posted the previous year with its profitability, measured by the Earnings per Share(EPS) falling to 43 cents from Ksh 4.52.

“In the current tough economic environment, the recovery of our business is largely dependent on healthy cash flows. There is a need to preserve cash and we, therefore, do not recommend the payment of any dividend,” said W. Jumba, Unga Group Plc Company Secretary.

Unga Group has been a household brand in Kenya for years. The coronavirus pandemic has set it back as it records one of the highest losses in its history

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