Mumias Sugar Company has posted a revenue of of KSH6.29 billion versus KSh5.53 billion a year ago in its Audited Financial Year results ended June 2016.
The total revenue increased by 13.6 percent to Ksh 6.3Billon due to higher sugar and ethanol sales volumes and realisation of higher net in sugar prices and improved brand mix.
The company posted a loss before tax of KSH6.06 billion compared to loss of KSH 6.31 billion year ago mainly attributed to ‘an acute shortage of quality cane particularly in the fourth quarter and widespread poaching,’ read a statement from the board signed by Elizabeth Kyeng’o,Director.
Durin the period, the company processed 1,215,566 metric tonnes of sugar cane which was 9.4 percent higher than the previous year of 1,111,473 metric tonnes. Sugar production increased by 6 percent to 75,073 metric tonnes compared to 70,891 previously at a recovery rate of 6.2 percent. Ethanol production increased by 20 percent to 12,367,072 litres compared to 10,311,773 litres in 2015.sugar and ethanol revenues increased by 10 percent and 37 percent to KSh5,097 million and Ksh 1,057 million respectively.
Going forward, “The Board of Directors view the company’s outlook as positive and that the ongoing initiatives will stabilise and revitalise the company.”
The company states that it is implementing its turnaround strategy with the support of the lenders and shareholders. The company states that it is also negotiating a debt restructuring with the lenders, streamlining its internal operations with a view to optimizing resource utilisation and improving efficiencies.
The Board is optimistic that the extension of the Common Market for Eastern and Southern Africa (COMESA) safeguards for another 2 years – expires in February 2019 – will ‘provide a better operating environment for execution of the turnaround strategy’.
“The extension has given a lifeline to the local sugar industry,” according to the financial statement.
The move was reached during the ongoing 19th COMESA Summit held in Madagascar where COMESA warned that the upcoming general elections scheduled for August 2017 could affect sugarcane farmers, hindering them from accessing the trade bloc.
COMESA comprises 19 countries with 15 member states participating in the COMESA Free Trade Area (FTA).
The company has not recommended any dividend.
However, the 2016 Kenya Annual Sugar Report released in April 2016 projected a decrease in Kenya’s sugar production in the marketing year (MY) 2016/2017
as cane farmers move to produce other products such as dairy and horticulture. Consumption is forecast to increase modestly and the deficit will be offset by a draw-down of stocks and imports.
“Cane production in Kenya is limited by poor crop husbandry practices, low access to inputs, poor transport infrastructure, and delayed payments to farmers. Most of the state-owned sugar mills are operating below capacity and are burdened by obsolete milling technology and huge debts.
Locally produced sugar remains uncompetitive in the COMESA region with the cost of production reportedly being 60 percent higher than it is in Uganda and Tanzania, and 50 per cent higher than it is in Zambia.”
Read: Brand In Focus: Mumias Sugar Company Limited