FEATURED STORY

Unga Group Holds Back Dividends as Full-Year Profits Tumble by 88%

Share
Share

Unga Group on Friday posted an 88% reduction in profits for the full year ended June 30, 2020, to Ksh66 million down from Ksh544.8 million reported at a similar period the previous year.

The company attributes the reduction in profitability to high prices of wheat and maize grain due to unfavourable weather conditions and rallying world wheat prices which exerted pressure on margins as well as the COVID-19 pandemic,

Following the huge reduction in profits and amid the COVID-19 pandemic, the company will not pay out dividends to its shareholders expressing the desire to conserve cash.

“With the existing challenges, the board is cautious about the new financial year. While the volumes may recover somewhat when the economy fully reopens, credit risk is likely to remain high as trade partners recover from lost revenue,” the company said in a statement.

“In the current economic conditions, recovery of our business is largely dependent on healthy cash flows. There is need to conserve cash to support the previously mentioned initiatives as well to invest in new business opportunities. The directors therefore do not recommend payment of a dividend,” the statement further said.

Revenue generated by the end of June, 2020 grew by 2% to Ksh18.3 billion from the Ksh9 billion posted at a similar juncture the previous year.

The company’s operating profit also fell to Ksh301 million from Ksh719 million even as taxes set back the company some Ksh50.7 million, a lower figure than the Ksh70.4 million captured in the company’s books at the same period last year.

Unga’s balance sheet also grew by 13% to Ksh12 billion from Ksh10 billion. Of the Ksh12 billion assets, non-current assets accounted for Ksh4.1 billion while current assets accounted for Ksh7.9 billion.

“The animal nutrition business was affected negatively by low uptake of farm inputs. Farmers faced competition from meat, milk, and egg imports from Uganda leading to unfavourable farm produce market prices. This led to shrinking demand for feeds, minerals, and animal health products,” further read the statement.

The company’s board says it is undertaking several initiatives to improve its financial perfomance including retrenching some employees, automation, introduction of new products into the market as well as investment in new business opportunities.

See Also>>>> KenGen Pays Out Sh1.6bn Dividend as Profits Shrink by 9%

Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *

PAST ARTICLES AND INSIGHTS

Related Articles
Sidian Bank branch launch
FEATURED STORY

Sidian Bank Upgraded to Medium-Size Status by CBK: Facts and Figures

Sidian Bank, a 50-branch lender closely associated with the late tycoon Chris...

Diageo exit was apparent even as EABL is building its war chest with a KSh 20 bn Cash Call
FEATURED STORY

 Diageo UK Plc Finally Exits East Africa’s Beer Market

Diageo Plc UK, a global brewing giant has sold its entire stake...

Sacco loans are popular with land , home buyers
FEATURED STORY

SACCO Loans for Land and House Purchases fall to KSh32.7Bn In September

SACCOs (Savings and Credit Cooperative Societies disbursed loans to members seeking to...

Edwin Dande CEO Cytonn Investments
FEATURED STORY

Cytonn Empire: How COVID-19 Pandemic Wreaked Havoc On Its Grand Real Estate Pipeline

Cytonn Investments Plc, a leading asset management firm, had a sound idea....