Flame Tree half-year profit falls 40pc on high costs

What you need to know:

  • Mid-sized manufacturer posts Sh39.9 million profit for the first six months of 2018.
  • Revenues remained relatively flat even as costs shot up to depress the bottom-line of the manufacturer
  • Group CEO Heril Bangera described the performance as robust, given that at Sh39.9 million, the profit has surpassed the Sh39.75 million earned in 12 months ended December 2017.

Mid-size manufacturer Flame Tree Group has posted Sh39.9 million profit for the first six months of 2018, a 40 per cent drop.

The group earned Sh66.5 million in a similar period last year.

Revenues remained relatively flat even as costs shot up to depress the bottom-line of the manufacturer with operations in Kenya, Mauritius, Rwanda, Ethiopia, Dubai and Mozambique.

However, Group CEO Heril Bangera described the performance as robust, given that at Sh39.9 million, the profit has surpassed the Sh39.75 million earned in 12 months ended December 2017.

“We have seen an improvement in business environment compared to 2017-- We continue to invest in a new range of products to strengthen the top line,” said Mr Bangera.

In early August, Suzie Beauty, a subsidiary of Flame Tree Group, introduced nine new products in the market including make-up remover and cleanser moisturizer.

The group also deals in a variety of product lines such as plastic water tanks, mobile toilets, cosmetics and snacks.

Sales growth

During the period under review, sales hit Sh1.26 billion, being a 0.4 per cent growth from similar half year of 2017.

However, the cost of the goods sold rose by four per cent to Sh861.8 million partly due to an increase in global prices of polymer – a key material in making of plastics.

Operating costs rose by Sh14.65 million to Sh324.2 million while taxes also increased by 21 per cent to Sh14.9 million.

Last year, the firm said that it was forced to make significant provisions against receivables from supermarkets in Kenya as they were extremely slow to pay.

Two major retail supermarkets- Uchumi and Nakumatt- rain into cash crunch, making it hard to pay suppliers on time.