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Unga posts Sh511.1mn half year net profit amid buyout talks

Flour made by the Unga Group. PHOTO | FILE
Flour made by the Unga Group. PHOTO | FILE 

Listed miller Unga Group #ticker:UNGA has posted an after-tax profit of Sh511.1 million for the six months to December, a near four-fold increase in earnings which resulted from higher sales.

The firm, which is the buyout target of American multinational Seaboard Corporation, saw its turnover improve 8.1 per cent to close the period at Sh11.07 billion.

Unga says its animal nutrition category – pigs, poultry and cattle feeds – recorded a 20 per cent increase in sales due to a stable supply of raw material despite last year’s biting drought.

Its human nutrition category, which includes brands like wheat flour, maize flour and porridge, saw volumes decline four per cent but this was partly cushioned by an upsurge sales of its flagship Jogoo brand.

“The improved availability of grain significantly improved the Group’s ability to produce maize meal and animal feeds at better yields, resulting in improved margins,” Unga said in a statement Wednesday.

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“The new supply chain and operational improvement initiatives also contributed to gains in profitability. Our new product lines – pulses, rice and fish feed --continue to show growth.”

Maize subsidy

Kenya on May 16, 2017 announced a Sh6 billion subsidy on maize imports to help lower the cost of flour which had shot up due to drought and poor planning on the part of the government.

The subsidy lowered the price of a 90-kg bag of maize to Sh2,300 from above Sh4,000 with taxpayers offering importers a rebate or the difference of about Sh1,700.

This kept the cost of the two-kg packet of flour at Sh90 from a high of Sh153 in April. The average cost of this bag is now Sh110.

Unga’s management says it is on track to commission a new 300 tonnes-a-day wheat milling plant in Eldoret by July, an improvement from the 250 tonnes currently handled by an older machine.

The miller, which closed several in-store bakeries belonging to its bakery subsidiary Ennsvalley to cut costs, says it is “working to recover its market presence.”

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