Cane shortage leads Mumias to Sh4.7bn loss

Listed sugar miller Mumias has registered a two percent increase in net losses for the year ended June despite ongoing efforts to restructure its operations.

During the period under review, Mumias’ net loss stood at Sh4.7 billion up from Sh4.6 billion a year earlier.

The loss was attributed to acute cane shortage in the fourth quarter which saw the miller slow down its operations.

There was a bright spot for Mumias with revenues rising 13 percent to Sh6.3 billion during the year. This was however negated by the high cost of sales which stood at Sh8 billion leading to a gross loss of Sh1.7 billion.

“The acute cane shortage experienced in quarter 4 saw the sugar production and recoveries heavily curtailed negating the benefits in the earlier quarters of the year. The cane shortage was largely due to widespread cane poaching,” Mumias said in a statement.

As part of the restructuring efforts, Mumias shut down its water bottling business which it deemed as un-viable.

The energy business was hit by an ongoing tussle with Kenya Power and was unable to sell any of the 14,692MWH generated during the year affecting revenue growth.

Sugar sales during the year rose to Sh5 billion during the year, with 1.2 billion metric tons of sugar processed.

There was also increased production of ethanol, which led to a 37 percent increase in sales to Sh1 billion.

Mumias has been under a spot of bother to get its operations back in line after years of loss making.

Cash flow constraints and financial mismanagement have over the years bogged down the sugar miller.

This has led to an overhaul of the top management with the government all stepping in to recapitalize its operations.

Between 2014 and 2016, the government has injected a total of Sh2 billion as a bailout package to clear debts and modernize the sugar mill.

Mumias is in talks with its lenders to restructure its debt as well as improving its own internal operations.

“The company is also streamlining its internal operations with a view to optimizing resource utilization and improving efficiencies,” the miller stated.

Mumias share is currently trading at Sh1.10 at the Nairobi Securities Exchange.

Tags:

KENYA POWER COMESA cash crunch Mumias government bailout restructuring plan ethanol full year loss cane shortage high cost of sales state owned millers sugar safeguards sugar sales

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