Companies

Cane poachers sink Mumias Sugar profit

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Mumias Sugar Company chief executive Peter Kebati. Photo/FILE

Mumias Sugar Company’s huge half-year loss has highlighted the plight of partly State-owned firms in Western Kenya as they fight to attain good form ahead of the March 2014 lapse of Comesa sugar import quotas.

The firm chalked up Sh1.1 billion in half-year net loss as high operational cost and a free-for-all cane procurement in Western Kenya reduced supply to millers.

The firm, which has issued a profit warning for full year, said the East African Community (EAC) had made matters worse by allowing Uganda and Tanzania to import duty free sugar from non-Comesa states flooding the region and depressing prices.

READ: Mumias seeks new products to shield it from sugar imports

“Cane poaching has become a big threat, the competition has become unhealthy and unscrupulous millers have invaded the business,” said Peter Kebati, Mumias Sugar CEO.

Thursday the firm publicised its financials showing net revenue had fallen to Sh5.4 billion compared to previous year Sh6.9 billion, representing a 22 per cent slide.

He said the increase in the cost of sugarcane as well as that of transportation compelled the company raise sugar prices 10 per cent.

ALSO READ: Cane shortage exposes Kenya to Comesa rivals

“Sugar prices were depressed at 30 per cent lower than last year (2011) due to stiff competition arising from the locally produced and imported sugar,’’ said CEO of Mumias Sugar.

Mr Kebati says the commissioning of ethanol and water plant has not paid off fully and only Sh10 million to Sh50 million respectively has been recouped from the projects commissioned in 2011.

The company hopes its strategic plans including the improvement of the ethanol plant will help supplement its income.

“The company looks forward to better performance in the second half of the year. Despite the challenges, our financial position remains healthy. We expect that once our ethanol distillery and bottled water are fully operational, they will positively contribute to our earnings over the medium term,’’ Mr Kebati said.

Mumias is the most efficient public sugar producer and its poor performance is likely to set alarms off in government circles.

Other millers have had close down, crippled by the cane wars. Some including private millers Butali and West Kenya have battled for space as the Kenya Sugar Board licences players near to each other despite the cane shortage.