Unga Group posts 53pc rise in half-year net profit

Unga Group Ltd has posted a 52.7 per cent growth in half-year net profit helped by a small foreign exchange gain, reversing heavy currency-related losses same period a year earlier.

The Nairobi bourse listed miller recorded an after-tax profit of Sh210.6 million in the six months to December 2013 compared to Sh137.9 million for similar period in 2012.

Unga, which has a subsidiary in Uganda, realised Sh4.26 million in foreign exchange gains compared to a loss of Sh58.4 million the previous year.

“As a result of strengthening of the Kenya shilling and Uganda shilling against the US dollar relative to the same period in the prior year, a marginal foreign exchange translation gain was realised compared to the significant prior period losses,” the miller said in a statement.

Turnover increased to Sh8.84 billion from Sh8.19 billion, with the firm noting that the introduction of VAT on animal feeds was putting pressure on its margins as farmers sought alternative sources.

Uganda also introduced a 10 per cent import duty on wheat grain, VAT of 18 per cent on the finished product, and 60 per cent duty on flour products.  As a result, exports from Kenya have been going into the market due to the price differences on wheat posing a threat on the miller’s Uganda subsidiary.

Unga is seeking to buy a Nairobi-based bakery to give it a presence in the finished cereal goods market which it exited more than 15 years back with the sale of Elliots Bakeries. The firm is in talks to acquire Ennsvalley Bakery — which makes bread, cakes, doughnuts, cupcakes and cookies.

READ: Unga eyes bakery buyout after selling Elliots in the 90s

The firm is also in the process of selling part or the entire 51 per cent stake in the packaging firm Bullpak Limited, a move seen as a fundraising plan to ease in its expansion as it seeks to widen its product range and geographical reach.

The firm did not recommend payment of an interim dividend.

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