NAIROBI: Kenya’s Mumias Sugar on Tuesday reported a bigger loss before tax in the full year to June, hurt by falling revenue due to lower sugar production volumes caused by a prolonged factory shutdown and a drop in cane deliveries.
Mumias, which received a cash bailout from the government at the end of January, said its loss widened to 6.31 billion shillings ($60 million) from 3.41 billion shillings in the year-ago period, while revenues fell to 5.53 billion shillings from 13.08 billion shillings in the year to the end of June 2014. Cost of sales for the period was 7.19 billion shillings compared with 12.23 billion shillings in the same period in 2014, it said in a statement.
It said it shut down for 2-1/2 months in the first half of its financial year due to cane shortages, and its performance was hit by a lack of spare parts arising from cashflow problems.
“The company operations, especially the production process, suffered heavily during the year, recording very high waste levels due to intermittent operations caused by frequent breakdowns, insufficient and poor quality cane supplies as well as inadequate power supply,” it said.
It said total sugarcane processed fell 42 percent to 1.1 million tonnes, with sugar produced falling to 69,851 tonnes from 172,326 tonnes in the year to June 2014. Early this year, the government said as part of the bailout, it would seek to change the company’s management and prosecute any managers who may have led to the company’s near-collapse.
The heavily-indebted firm has been struggling with cash flow problems in recent years, forcing the government to step in with bailout funds and hired a new chief executive, Errol Johnston, to drive its turnaround. Its loss per share widened to 3.04 shillings from 1.77 shillings. Kenya has used high tariffs to protect its sugar farmers but the policy has encouraged smuggling of cheaper sugar imports.
