Depreciation of the Kenyan shilling and constrained access to foreign exchange have driven Unga Group Plc to a loss of Sh959.3 million for the year ended June 30, 2023.
This reverses a profit of Sh311.3 million posted in the preceding 12-month period to June 2022, which included gains from the transfer of business assets. Unga’s profit erosion was despite revenues increasing by 33 per cent driven by high prices of raw materials and finished goods.
“Loss from continuing operations increased due to the depreciation of the Kenya shilling and inability to secure an adequate supply of US dollars causing significant forex losses and interest expenses,” Unga said in a trading statement on Friday (September 29).
Despite growing total revenues from Sh18 billion previously, Unga has cited depressed margins after difficulties in pushing all pass-through costs to consumers.
“Maize grain prices increased by up to 100 per cent between July 2022 and July 2023. This affected affordability among consumers due to high finished product prices and strained margins to the business due to the inability to pass all the raw material price increases to the consumers,” the company added.
During the year, Unga's finance costs more than doubled to Sh784.3 million from Sh267.4 million previously. The manufacturer did not generate any cash from operations, posting a dip of Sh9.8 million in generated cash from Sh289.7 million.
The business, nevertheless, remains solvent with current assets at Sh6.6 billion against current liabilities at Sh5.6 billion.
After the profit reversal, Unga Group earnings per share now stand at negative Sh8.41 from Sh2.48 previously.
Unga expects shortages in the supply of foreign currency to persist alongside the depreciation of the Kenya shilling, identifying both factors as risks to the business.
The company is betting on implementation of its new strategic plan, which includes putting out quality products to the market, to turn around its fortunes.