Unga Group’s net profit for the six months to December has dropped 20.6 per cent in the absence of the one-off gain they received in the previous period from the sale of a paper packaging subsidiary.
The flour miller’s half year after-tax earnings stood at Sh327.2 million compared to Sh412.2 million posted in 2015 when it booked a Sh151 million gain from the sale of its 51 per cent stake in Bullpak Limited to UK-based Nampak Holdings.
Unga, which is listed at the Nairobi Securities Exchange (NSE), saw its revenue for the period grow nine per cent to Sh10.5 billion, compared to Sh9.65 billion recorded the previous year.
“The decline in net profit for the period is primarily attributable to the gain in the previous year from the disposal of the Group’s investment in Bullpak Limited,” the miller said in a statement.
Depreciation of the Ugandan and Kenyan shilling saw the flour miller suffer foreign exchange losses of Sh32 million, which was 19.46 million lower than in 2014.
The sale of Bullpak was completed in September 2014 to Nampak, which already held a minority stake in the firm. Bullpak manufactures paper packaging products that are used by producers of fast-moving consumer goods.
The business’ volumes had progressively come under pressure from competitors, forcing the flour miller to dispose of its remaining stake and parcels of land to boost its cash flow.
Unga noted that maize availability remained stable during the period.
However, this is not expected to persist going forward since harvesting challenges experienced during the El Nino rains compromised grain quality, the company said.
The flour miller also announced that it is in the process of incorporating the Ennsvalley Bakery into its business having bought a majority stake from Kenya’s sole inflight caterer NAS Holdings.
“Integration of the Ennsvalley Bakery business in the progress with the key focus being to improve production efficiency, to increase plant capacity utilisation and to broaden market presence,” Unga said.
The firm’s board of directors did not recommend the payment of an interim dividend.