Mumias Sugar Company has registered a two per cent increase in losses in the year ending June 2016 as a severe cane shortage took a toll on the firm’s earnings.
The miller’s after tax loss grew to Sh4.7 billion in the year under review from Sh4.6 billion in 2015 as the once vibrant miller struggles to return to profitability.
The company had a difficult year in operations, which saw some of the revenue streams closed. The water plant was discontinued, with the firm saying that the project was no longer viable.
The firm was also unable to sell electricity to Kenya Power due to the ongoing dispute between the miller and the power utility firm.
“The decline in profit is attributed to an acute shortage of quality cane, particularly in the fourth quarter,” states the company’s financial report.
The total revenue, however, increased by 13.6 per cent in 2016 to Sh6.3 billion compared to Sh5.5 billion in 2015. The increment is attributed to higher sales in volume of ethanol and sugar.
The report says sugar production increased by six per cent to 75,083 tonnes, compared with the previous year’s 70,891 tonnes.
Ethanol production rose by 20 per cent to 12.3 million litres compared with 10.3 million litres in 2015, earning the company Sh1 billion in revenues.
The NSE-listed sugar company has been in financial difficulties blamed on mismanagement, shortage of sugarcane and cash flow constraints.
A forensic audit that was carried out by financial consultancy firm KPMG earlier, found that there was massive misuse of funds, pilferage and tender manipulation that cost the miller Sh1.1 billion through illegal sugar imports.
The company’s board subsequently sacked top managers from its marketing department for diverting ethanol meant for export into the local market, causing tax revenue losses worth millions of shillings as part of the condition for government bailout.
The miller has so far received close to Sh3 billion from the government for a turnaround plan.
In its financial statement, the firm says it is implementing turnaround strategies with the help of its lenders and shareholders.
Credit: Business Daily