Listed flour miller Unga Group’s earnings after tax for the six months to December dropped 20 per cent signalling a correction after previous earnings were boosted by asset sale.
The miller attributed the decline in profit after tax to Sh327 million to the previous year's sale of its shareholding in paper packaging firm Bullpak Limited the previous year.
“The decline in net profit for the period is primarily attributable to the gain the prior year from the disposal of the Group’s investment in Bullpark Limited,” said the miller in a notice.
The miller said it also suffered from foreign exchange losses.
“Depreciation of the Kenya and Uganda shilling against the US dollar resulted in significant foreign exchange translation losses albeit being lower than the previous period,” it said.
The miller’s revenue for the six months ended 31 December 2015 stood at Sh10.5 billion compared to Sh9.6 billion during a similar period last year. It did not recommend payment of dividends to its shareholders.
Going forward the group said it is eying better returns as it expands its business foot print.
“The animal nutrition and health business opened a second sales depot in Thika town to better serve the central Kenya market. Integration of Ennvalley Bakery business is in progress with the key focus being to improve production efficiency, plant capacity and market presence,” it said.
The firm acquired Ennsvalley Bakery — which makes bread, cakes, doughnuts, cupcakes and cookies — by offering it 25 million shares in Unga worth Sh446 million.
Unga hopes the Nairobi-based bakery will give it a presence in the finished cereal goods market which it exited more than 15 years back with the sale of Elliots Bakeries.
Unga also took full ownership of Unga Millers Uganda after buying out a 40 per cent stake held by minority shareholders for an undisclosed amount.