Unga Group cuts 117 jobs amid sluggish sales

Unga Group CEO Joseph Choge. PHOTO | DIANA NGILA | NMG

Food processor Unga Group cut 117 jobs in the year ended June, with most of the retrenchment occurring in the sales and distribution units.

The company’s workforce dropped to 283 in the review period compared to 400 the year before, according to disclosures in its latest annual report.

Its sales team shrank the most to 39 from 126 while the staffing in the production department declined to 103 from 134.

The staffing in management and administration however rose by one to 141. The job cuts came as the company reported losses from normal operations, pointing to reduced margins.

Unga said it is feeling the heat of increased competition, noting that the marginal sales growth registered in the review period came from raw material price inflation.

“This has been a difficult year for the board. Our animal nutrition business has continued to struggle in the face of increased competition, raw material supply bottlenecks, and compressed demand due to the high cost of living which has forced farmers to seek alternative animal feeds,” Unga said in the report.

“We have had to make extremely difficult decisions as a board, with more concerted efforts focused on fire fighting in order to keep our business running in the face of all of the aforementioned headwinds.”

Unga’s managing director Joseph Choge said the packaged food business has become more competitive with the entry of new players in the past few years.

This has sparked a price war, with most firms betting on lower prices to gain market share in an economy where rising inflation has hurt consumers’ purchasing power.

“The competitive landscape has continued to intensify, with over 50 new millers joining the fray over the last two years alone,” Mr Choge said.

He added that the company continues to be affected by cheap poultry imports from the region and fish from Asia, shrinking the market for its animal nutrition products.

Unga says it will continue to differentiate itself as a supplier of quality products, leveraging its decades-old brands.

The company’s sales rose 1.2 per cent to Sh18 billion in the year ended December. Higher costs saw the company report an operating loss of Sh502 million, reversing an operating profit of Sh616.2 million a year earlier.

Unga however saw its net profit grow to Sh311.3 million from Sh293.4 million, benefitting from a one-time gain of Sh802.5 million from the sale of its Ennsvalley bakery business.

Unga is the latest to disclose job cuts, joining the companies that have trimmed their workforce in the wake of the Covid-19 pandemic.

The layoffs have been witnessed in various sectors including manufacturing and services as companies grapple with sluggish sales and falling margins.

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