Mumias Sugar profit rises 561p.c

• Listed firm optimistic good performance to continue

High sugar prices and cost cutting measures sweetened Mumias Sugar Co Ltd’s pre-tax profit by 561 per cent in the first six months to December 31, 2009.

The listed miller’s pre-tax profit increased from Sh231 million in the previous financial year to Sh1.5 billion.

A loss and profit statement issued on Friday, indicated that the company returned net revenues of Sh7.7 billion, which is 49 per cent higher than the Sh5.2 billion achieved over the same period last year.

“The world’s sugar prices are at an all time high, ranging at $750 per tonne (about Sh57,000). This has resulted in improved sugar selling prices within the period. Currently, sugarcane prices have been increased from Sh2,850 to Sh3,148 per tonne,” read the statement from Ms Emily Otieno, the company’s secretary.

Ms Otieno says the appreciation of the Kenya shilling for the last six months has been favourable for the business, especially on dollar-denominated liabilities, mainly the long-term loan and costs of spares, fuel and fertiliser prices.

For the period under review, the firm crushed 1.1 million tonnes of cane sugar, which was 19 per cent higher than the 961,596 tonnes in the previous year. Sugar produced was 123,183 tonnes, which is 18 per cent higher than the 104,686 tonnes produced last year.

This performance is attributed to what the firm terms as improved factory plant availability and normal supply of cane in the period.

The miller’s co-generation plant commissioned in May 2009 is said to have increased efficiency of the sugar plant by providing steam and reliable power, which has increased the level of recoverable sugar from sugarcane.

However, the firm says, there are some technical and operational challenges in the operation of the co-generation plant, which has affected revenues generated from power export.

“These issues are being addressed with Kenya Power & Lighting Ltd and the regulators,” the firm says.

“The future of the sugar industry in Kenya lies in diversification and application of low cost technology in growing and processing sugarcane,” the statement read in part.

The miller has plans to venture into ethanol production from molasses, a by-product of sugar. The project to be commissioned by October 2011, is expected to produce 22 million litres of extra neutral alcohol (ENA) per year.

The plant will also have the capacity to produce anhydrous alcohol for blending with petrol to produce gasohol for vehicles. The project will cost about Sh3 billion of which 50 per cent will be financed through debt, with the balance coming from internal sources.

As the firm heads for the final part of the year, it is optimistic that things are looking up.

“Global sugar production deficit in 2009 is likely to continue in 2010. Major world producers are yet to cover deficits in their home markets: Some are building up strategic reserves to guard against major production fluctuations.