Mu­mias records Sh4.7 bil­lion loss as Kenya’s sugar pro­duc­tion drops

The Star (Kenya) - - News Business Financial Market - WEITERE MWITA @MwitaMartin

Mu­mias Sugar in­creased its net losses for the full year ended June 2016 by two per cent to Sh4.73 bil­lion. This was at­trib­uted to “an acute short­age of qual­ity cane par­tic­u­larly in the fourth quar­ter”.

This is a rise from a loss of Sh4.64 bil­lion posted in 2015, the com­pany re­ported in its au­dited fi­nan­cial state­ment yes­ter­day. Fol­low­ing the in­crease in losses, the firm’s di­rec­tors did not rec­om­mend pay­ment of div­i­dends.

The listed miller, how­ever, posted im­proved rev­enues which grew by 13.6 per cent to Sh6.28 bil­lion, from Sh5.53 bil­lion posted in 2015.

This, it said, was “due to higher sugar and ethanol sales vol­ume, and re­al­i­sa­tion of higher net sugar prices and im­proved brand mix”.

Dur­ing the pe­riod, the com­pany pro­cessed 1.2 mil­lion met­ric tonnes of sugar, com­pared to 1.1 mil­lion met­ric tonnes in 2015 – a 9.4 per cent in­crease.

Sugar pro­duc­tion went up by six per cent to 75,073 met­ric tonnes, com­pared to 70,891 met­ric tonnes in 2015.

“To­tal over­head costs (in­clu­sive of as­set im­pair­ment of Sh1.39 bil­lion) de­creased by nine per cent to Sh4.5 bil­lion. Mar­ket­ing, dis­tri­bu­tion and ad­min­is­tra­tion costs alone dropped by Sh1.1 bil­lion, a re­duc­tion of 33 per cent com­pared to the pre­vi­ous year,” the state­ment signed by di­rec­tor El­iz­a­beth Kyengo reads.

She said the com­pany reval­ued some of its non-cur­rent as­sets (mainly fac­tory plant and equip­ment and lease­hold land), re­sult­ing in a reval­u­a­tion sur­plus of Sh9.2 bil­lion.

The sugar mar­ket is cur­rently ex­pe­ri­enc­ing a deficit due to de­clin­ing sugar out­put in the main sugar-pro­duc­ing coun­tries, im­pact­ing pos­i­tively on the global sugar price and in the Comesa re­gion.

Mu­mias Sugar has, how­ever, had an un­sta­ble sup­ply with its prod­ucts miss­ing on re­tail shops for months.

Kyengo said the price of sugar lo­cally has in­creased and is fore­cast to re­main sta­ble. She said Kenya has ne­go­ti­ated a two-year ex­ten­sion of the Comesa safe­guards due to ex­pire in Fe­bru­ary 2019. “The ex­ten­sion has given a life­line to the lo­cal sugar in­dus­try,” Kyengo said.

The com­pany is im­ple­ment­ing a turn­around strat­egy, which in­cludes debt re­struc­tur­ing, with the sup­port of its len­ders and share­hold­ers – par­tic­u­larly the govern­ment, its ma­jor­ity share­holder.

“The com­pany is also stream­lin­ing its in­ter­nal op­er­a­tions with a view to op­ti­mis­ing re­source util­i­sa­tion and im­prov­ing ef­fi­ciency.

Key ini­tia­tives un­der­taken in­clude re­ha­bil­i­ta­tion of the fac­tory, im­proved ca­pac­ity util­i­sa­tion of the ethanol plant, staff re­struc­tur­ing for higher pro­duc­tiv­ity, ac­cel­er­ated cane de­vel­op­ment and en­hanced en­gage­ment with cane farm­ers,” Kyengo said.

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