NAIROBI: Mumias Sugar financial woes deepened after the miller doubled its loss before tax to Sh6.31 billion in the year ended June 2015 from Sh3.41 billion. The sugar miller’s full-year after tax loss increased from Sh2.7 billion as at June 2014 to Sh4.6 billion.
The cash strapped firm, which recently received Sh1 billion government bailout to help it meet some short-term obligations, saw operating revenues fall to Sh5.53 billion from Sh13.08 billion recorded in the year ended June 2014, with management attributing this to lower sugar and ethanol sales volumes caused by a prolonged factory shutdown and a drop in cane deliveries.
The firm said sugar revenue for the year fell to Sh4.65 million below previous year by 60 per cent due to the lower volumes sold. Board Chairman Dan Ameyo said the firm experienced numerous challenges that adversely affected performance.
“The factory was closed for two and a half months in the first-half of the year due to acute cane shortage, the little cane available was immature and of poor quality. The factory’s poor status arising from prolonged lack of critical spares owing to cash flow constraints experienced throughout the year resulted to poor recoveries,” said Ameyo, in a statement Tuesday.
“Due to the integrated nature of the plant set up, the other business segments were also adversely affected by the poor sugar segment performance with Ethanol revenues falling to Sh772 million, up from Sh1 billion.”
He said electricity sales dropped by 74 per cent to Sh59 million, from Sh230 million achieved the previous year. “Electricity exported to the national grid also dropped by 74 per cent to 14,451 MWH, down from 55,935 MWH exported the previous year mainly due to non-resumption of power exports to the national grid after the closure of the factory in October 2014 following a dispute with Kenya Power,” Ameyo said.
Also, the bottled water production totaled 675,000 litres from 1,291,000 litres recorded in the previous year, while quantity sold was 775,872 litres compared to 1,396,000 in 2014, reflecting a reduction in both production and sales during the year.
Ameyo attributed this to longer downtime incidental to the installation and commissioning of a new auto labeler machine as well as the impact of the factory closure.
Ameyo said the miller operations, especially the production process suffered heavily during the year under review as a result high waste levels. The firm’s debt position worsened with net liabilities jumping from Sh6.28 billion in 2014 to Sh11 billion.
“These grew progressively worse during the second-half of the year,” he said. To improve the miller’s fortunes, Ameyo said the firm has crafted a turnaround strategy which includes re-capitalisation of the company, debt restructuring and change of management.
