Mumias Sugar in Sh6.8 billion loss

Mumias Sugar company workers arrange processed sugar at the warehouse. (Photo: Benjamin Sakwa/Standard) 

Mumias Sugar slid deeper into the red after reporting a net loss of Sh6.8 billion in the financial year ended June 30, 2017 against Sh4.8 billion made in 2016.

A tough operating environment characterised by acute cane shortage and high prices contributed to the massive loss.

Mumias, whose product is back on the shelves after months of factory maintenance, had it rough as revenues declined by 67 per cent to Sh2.1 billion from Sh6.3 billion the previous year.

Turnover from sugar was Sh1.3 billion, down from Sh5.1 billion in 2016, while revenue from ethanol also declined from Sh1 billion to Sh794 million.

“The major challenge faced by the company throughout the year was the acute sugar shortage experienced in the region, coupled with a 28 per cent increase in cane price,” said the firm said in a statement accompanying its financial statement published yesterday.

The miller crushed 407,008 tonnes of cane during the period under review, a drop of 67 per cent from the 1,214,566 it managed the previous year. This, said the company, led to the factory operating below optimum capacity.

“As a result, a lower production of 15,891 tonnes of sugar was achieved compared to 75,073 tonnes produced the previous year,” said the statement.

Mumias’ other operations, including production of ethanol and bottling of water, also performed dismally.

Its ethanol plant produced 6.9 million litres, a 41 per cent drop compared to 11.6 million litres produced in the previous financial year. This was blamed on lack of molasses.

The miller’s water bottling plant remained closed throughout the year.

The sub-optimal operation, which caused the listed miller to spend more cash than it received, led to the closure of the plant in the last quarter of the year as it focused on 'cane development activities and factory plant maintenance'.

Deliveries slumped

The entire sugar industry has suffered from the effects of drought, which saw cane deliveries in the first eight months of 2017 slump by 44 per cent compared to the same period in 2016.

About 2,775 tonnes of cane were delivered to 10 sugar manufacturers between January and August 2017, compared to 4,962 tonnes in the same period last year, according to figures from the Sugar Directorate.

Mumias is betting on several factors, including competitive sugar cane pricing and faster processing of payment to farmers, to stay afloat.