The directors do not recommend payment of a dividend
Mumias Sugar Company has reported a Ksh15.1 billion (US$150.8 million) loss for the year ended June 2018, sinking deeper into losses after recording a Ksh6.8 billion (US$67.9 million) loss the previous financial year.
The company which has delayed releasing its 2018 results by more than five months saw its revenues for the period under review drop by 33.3 per cent to Ksh1.4 billion from Ksh2.1 billion the previous year.
The state owned miller has blamed the steep rise in loss mainly to a 101 per cent increase in impairment charges to its plant and machinery of Ksh4.9 billion from Ksh2.6 billion charged a year earlier.
The Nairobi Securities Exchange(NSE) listed firm has also blamed its woes to the “de-recognition of deferred tax assets” leading to a tax expense of Ksh5 billion from a tax income position of Ksh2.7 billion realized the previous year and low production following plant shut downs in the first and fourth quarters of the financial year.
“The acute cane shortage significantly hindered the plant throughputs with cane delivered dropping by 32 per cent to 283,435 tonnes compared to 417,347 tonnes last financial year. Sugar produced was 14,622 tonnes , a drop of eight per cent against 15,891 tonnes achieved the previous year,” chairman Kennedy Ngumbau has noted.
The company’s distillery yielded 3.2 million litres of Extra Neutral Alcohol (ENA) compared to 6.9 million in 2017, while the Cogen plant exported 3,581megawatts to the national grid.
Turnover for the year reduced to Ksh1.37 billion as compared to previous year’s Ksh2.09 billion, which the company says was mainly because of the reduced sales volumes across the company’s products following the long closure of the factory.
Focus on prudent cost management saw the administrative costs reduce by 17 per cent from Ksh2.3 billion to Ksh1.9 billion in the year.
The company’s stakeholders have continued supporting its turnaround initiatives. The government on the other hand has settled over Ksh0.7 billion owed to Mumias Sugar farmers. This is expected to have a positive impact on future cane availability.
The firm has lauded the ongoing government concerted efforts to crackdown on illegal imported sugar and ethanol , and the push to resume cane zoning which it says are all “very encouraging initiatives” that will greatly support the company’s turnaround strategy and help revive the ailing sugar sector.
“Discussions with the lenders’ to restructure the debts and extend the standstill arrangements are ongoing to obtain much needed financial relief. The board is seeking to enlist the support of the lenders to identify a suitable and competent strategic partner to enhance the financial capabilities to enable full business recovery,” Ngumbau said.
The board has approved the implementation of a five-year strategic plan 2018-2022 focused on increasing plant productivity, staff rightsizing and leasing of non-core assets and enhancing cane supply.
These coupled with improved power export returns and the independent operation of the distillery should see the company’s fortunes improve in the coming years.
The listed firm missed the October 2018 financial reporting deadline and applied for a one month extension from the Capital markets Authority. It however failed to report after the extension, leading to a further three months additional time.
“The board of directors views the company’s outlook as positive and that the on-going initiatives will stabilize and revitalize the company,” the firm has said.
The directors do not recommend payment of a dividend.