KENYA – Unga Group Limited, a Kenyan-listed food processing firm has posted a KES 959.3 million (UD$6.6M) loss for the year that ended June 30, 2023, attributing the dip to a depreciation of the Kenyan shilling and constrained access to foreign exchange.
According to The Nation, this reverses a profit of KES 311.3 million (US$2.1M) posted in the preceding 12-month period to June 2022, which included gains from the transfer of business assets.
Despite Unga’s profit erosion, the grain and feed miller posted revenue growth of 33% driven by high prices of raw materials and finished goods.
In a trading statement on September 29, Unga Group noted that loss from continuing operations increased due to the depreciation of the Kenya shillings and the inability to secure an adequate supply of US dollars causing significant forex losses and interest expenses.
Unga added that, despite growing total revenues from KES 18 billion (US$124M) previously, the company has cited depressed margins after difficulties in pushing all pass-through costs to consumers.
The company noted that the price of maize grain, the primary raw material increased by up to 100% between July 2022 and July 2023 affecting consumer’s purchase power.
This was led by the pass-through scenario where the company had to increase the price of finished products to cope with the surging cost of operating the business.
The company, however, added that it faced strained margins to the business due to the inability to pass all the raw material price increases to the consumer.
The business, nevertheless, remains solvent with current assets at KES 6.6 billion (US$45M) against current liabilities at KES 5.6 billion (US$38.4M).
After the profit reversal, Unga Group earnings per share now stand at negative KES8.41 from KES 2.48 previously.
Unga expects shortages in the supply of foreign currency to persist alongside the depreciation of the Kenya shilling, identifying both as risks to the business.
The company, however, is betting on the implementation of its new strategic plan, which includes putting out quality products to the market to turn around its fortunes.