Mumias posts slimmer losses as it appoints new chair

Mumias Sugar Thursday reported a smaller loss of Sh73.4 million in the six months to December, aided by improved sales as the miller turns to cost-cutting for profit growth.

The miller posted a loss of Sh1.1 billion in a similar half a year earlier on high operation costs and reduced sugar production.

Mumias recorded a turnaround in the period to December as its revenues grew 31.5 per cent to Sh7.13 billion on higher unit sales.

READ: Mumias eyes cost-cutting to reverse Sh1.6bn loss

It has replaced its long-serving chairman John Bosse with Dan Ameyo, whom the miller tapped in November. Mr Ameyo is the former head of Postal Corporation of Kenya.

Mumias chief executive officer Peter Kebati said the miller will undertake a number of measures to cut costs as it prepares to match competition from cheaper imported sugar.

“Cane availability is still a major challenge as a result of lower area under cane, declining yields and poaching from millers who have not developed their own cane,” said Mr Kebati.

“We will continue with cost management to ensure efficiency and sustainability.” The miller expects the rainy season to boost cane production and ultimately raise sales.

The miller also deals in bottled water, ethanol and power generation in a diversification plan aimed at cutting reliance on sugar. Sales from ethanol increased to Sh488 million in the half from Sh50 million in the same period a year earlier while the water business grew revenues 40 per cent to Sh14 million.

Mumias says the power division saw sales drop 46 per cent without giving the actual revenues. Its share price at the Nairobi Securities Exchange has dropped 26 per cent over the past six months to trade at Sh3, which is up compared to Wednesday’s close of Sh2.95.

Mumias recently reduced the price at which it is buying cane from Sh3,825 per tonne to Sh3,385. Its rivals have also reduced their prices by between 11.5 per cent and 27 per cent in what is seen as signal of increased cane supply.

West Kenya and Butali are currently paying Sh2,700 per tonne of cane deliveries, down from the previous Sh3,700.

Mumias is also in talks with local and international banks to help it build a Sh34.3 billion factory in Tana Delta in August.

The factory, which will be a joint venture with Tana/Athi River Authority (Tarda), is expected to boost the firm’s sugar production which has fallen in recent years due to inadequate cane supplies.