Mumias Sugar sounds profit warning as half-year loss escalates to Sh2.9b

This means for the full year ending June this year, the troubled sugar miller will post at least a Sh5.9 billion loss, which is 25 per cent higher than last year when it posted a Sh4.73 billion loss.PHOTO:COURTESY

Mumias Sugar Company’s loss for the six months ended December last year has widened by 87 per cent to Sh2.92 billion.

The half-year loss has prompted the miller to issue a profit warning.

This means for the full year ending June this year, the troubled sugar miller will post at least a Sh5.9 billion loss, which is 25 per cent higher than last year when it posted a Sh4.73 billion loss.

“Mumias Sugar hereby announces that the projected loss for the year ending June 30, 2017 will be more than 25 per cent compared to the loss reported for the same period in 2016,” said the firm’s Chairman Kennedy Mulwa.

From the sugar segment, the miller posted a gross loss of Sh2.67 billion while cogen realised a loss of Sh979.8 million.

Ethanol and water returned Sh129 million and Sh17.1 million losses, respectively.

The management attributed the current dismal performance to shortage of cane, leading to the factory running at below capacity.

This led to high costs of production since under-utilised capacity still consumes resources such as repair and maintenance.

The miller’s net revenue, which refers to sales from sugar, was down by almost half (49 per cent) to Sh1.53 billion, condemning it to a loss before tax of Sh3.79 billion.

This was due to a drop in sales. Whereas in a similar period in 2015 it sold 36,333 tonnes of sugar, in six months to December, it only did 12,175 tonnes.

On average, the figure translates to selling just 67,638 kilograms daily or just 33,819 two-kilogramme packets of sugar.

In the six months to December, sugarcane crushed was 319,746 tonnes, which was 45 per cent lower than the 581,541 tonnes in a similar period in 2015.

As a result, the amount of sugar produced was 12,197 tonnes, being 67 per cent lower than what was produced over a similar period last year. This could get worse in the second half of the year going by the company’s outlook.

“The company envisages cane shortages running through the second half of the year,” said Mr Mulwa.