Flame Tree Group profit dries up on Covid heat, Tuskys closure
Listed manufacturer of cosmetics, plastic tanks, snacks and spices, Flame Tree Group Holdings (FTGH), has reported a 10.8 per cent decline in net profits for the six months to June this year over soured business environment during the pandemic.
The Nairobi Sercurities Exchange listed company, however, said they gained new clients in plastics, cosmetics, spices and trade even though they lost a huge retailer when retail chain Tusky’s collapsed.
The net profits for the six months this year hit Kes66.9 million down from Kes75.1 million in a similar period last year.
Flame Tree said they have suffered from huge logistics costs, disruption of supply chains and currency shortages which affected most of their business lines.
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They said they faced restricted access to some markets following the lockdowns, and was faced with a sharp increase in the costs of raw materials fuel, and logistics costs.
There was a dollar scarcity in Ethiopia and Rwanda which apparently also affected purchase of raw materials for their factories.
As a result, revenue was down to Kes1.6 billion from Kes2.9 billion in the period under review.
“The group’s priority has been to keep increasing sales in every business line and mitigate the sharp rise in international raw materials prices and logistics costs which have impacted margins severely,” FTGH said.
FTGH will now focus on innovative ways to manage costs even as the company managed to reduce expenditure on most operational lines.
Lower inventory meant that costs of sales were down to Kes1 billion from Kes1.7 billion while the firm’s administration costs were down to Kes144 million from Kes496 million.
Sales and distribution expenses were down marginally to Kes211 million and other operating expense were also down slightly to Kes66 million.
