Mumias Sugar runs up losses, seeks bailout

Mumias Sugar continued to run up losses booking a net loss of Sh1.58 billion in the six months to December up from Sh1.4 billion during a similar period in 2014 even as it sought a Sh2 billion government bailout.

The miller blamed the 8.9 per cent increase in the after tax losses on a tough operating environment.

“During the six month period, high interest rates coupled with a depreciated Kenya shilling adversely affected the company in terms of high cost of finance and foreign currency exchange losses,” Mumias Chairman Dan Ameyo said in a statement.

The company recorded net revenue of Sh2.97 billion up from Sh2.67 billion signifying an improvement by 11 per cent compared to a similar period the previous year.

READ: Mumias warns of wider annual losses

Its water business suffered from an operations hitch with revenue from water decreasing by 37 per cent to Sh8.6 million compared to Sh13.7 million generated during a similar period last year. Revenue from its ethanol business rose by 16 per cent to Sh435 million compared to Sh376 million generated during a similar period last year.

CAUTIOUSLY OPTIMISTIC

Going forward, the miller is exuding optimism it will record better fortunes.

“Despite the challenges highlighted, the company is cautiously optimistic that it will record better performance in the second half of the year,” said Mr Ameyo.

He cited the current dry spell which he noted has enabled the miller to access to low lands which have mature cane with high sucrose content.

“The company envisages depressed sugar prices during the second half of the year as a result of cheap illegal imports. The ethanol market remains promising although it is being adversely affected by the Government’s decision to suspend lifting of export spirits,” he explained.

Mr Ameyo said the miller is restructuring its existing long-term loans as it anticipates additional funding from the government amounting to Sh2 billion.