News Column

Mumias reports smaller half-year loss on cost cuts

February 20, 2014

SIMON CIURI -1



Mumias Sugar Thursday reported a smaller loss of Sh73.4 million in the six months to December 2013, aided by improved sales as the miller turns to cost cutting for profit growth.

The company posted a loss of Sh1.1 billion in a similar period a year earlier on high operation costs and reduced sugar production.

Mumias recorded a turnaround in the period to December as its revenues grew 31.5 per cent to Sh7.13 billion on higher unit sales.

Chief executive officer Peter Kebati said the miller will undertake a number of measures to cut costs as it prepares to match competition from cheaper imported sugar.

"Cane availability is still a major challenge due to declining yields and poaching by millers who have not developed their own cane," said Mr Kebati.

"Management will continue with cost management to ensure efficiency and sustainability."

READ: Mumias eyes cost-cutting to reverse Sh1.6bn loss

The miller also deals in bottled water, ethanol and power generation in a diversification plan aimed at cutting reliance on sugar.

Sales from ethanol increased to Sh488 million in the first half from Sh50 million in the same period a year earlier while the water business grew revenues 40 per cent to Sh14 million.

Mumias says the power division saw sales drop 46 per cent without giving the actual revenues.

Its share price at the Nairobi Securities Exchange has dropped 26 per cent over the past six months to Sh3.00 on Thursday.

The miller recently reduced the price at which it buys cane from Sh3,825 per tonne to Sh3,385.

Its rivals have also reduced their prices by between 11.5 per cent and 27 per cent in what is seen as a signal of increased cane supply.

West Kenya and Butali are currently paying Sh2,700 per tonne of cane deliveries, down from the previous Sh3,700.


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Source: Business Daily (Kenya)


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