Unga group posts losses despite duty free maize

Unga Group’s Jogoo maize flour brand. The firm plans to grow volumes and revenues through direct sales. [Willis Awandu, Standard]

Tax exemption on maize imports failed to lift listed flour miller Unga Group, which reported a Sh32 million loss for the year ending June this year.

Last year, Unga Group raked in a Sh508 million in profits as the sale of maize declined by two per cent.

The miller, which issued a profit warning earlier this year over stockouts due to the prolonged drought, says the intervention by the Government only came in towards the end of the financial year.

“Duty-free importation and the subsidy programme came towards the end of the financial year,” Unga Group said in its annual report.

Under the scheme, importers have been selling maize to millers at Sh2,300 for a 90kg bag despite buying it at above Sh4,000, with the State settling the difference.

This pushed down the prices of a 2kg packet of maize flour to Sh90 from a high of between Sh140 and150 earlier in the year.

The Government had planned to encourage imports of up to 2.9 million bags by June and five million bags by July.

 Poorly managed

Millers have, however, raised concerns about the implementation of the programme, stating that it was poorly managed and that they prefer to revert to a free market.

However, the Cabinet secretary for Agriculture, Willy Bett, has said the Sh6 billion subsidy programme could continue until December.

Unga Group also lost Sh151 million in goodwill impairment over reduced operations in Nakumatt stores, which included bakeries that have now been closed.

“The bakery business was negatively impacted by credit challenges facing the retail sector, resulting in an exit from most Nakumatt stores, where it had bakery implants and counters,” the firm stated.

The miller now plans to grow volumes and revenues through direct sales and has bought out minority stakeholders. It plans to buy a 48 per cent stake in Ennsvalley Bakery Ltd.