High costs, forex woes plunge Unga in Sh131 million half-year loss
Rising prices of raw materials amid a severe drought at a time when the Kenyan Shilling has been losing ground against major world currencies has seen Unga Group suffer Kes131 million loss for the six month period ended December 31, 2022.
In the period, however, the food processor’s revenues went up 36 percent to Kes12 billion from Kes8.8 billion during a similar season previously on account of increased prices for the firm’s range of finished products as Unga passed on the costs to consumers in a bid to recover raw material price inflation.
Locally, analysts note the company has been experiencing uncertainty over the importation of duty-free maize stocks at a time when supplies from Kenyan farmers remains constrained due to a biting drought that has affected grain production for five consecutive seasons. A sixth rain season is projected to fail, too. Consequently, Unga has been grappling with high input costs that are eating into the margins of miller.
“High cost of key raw materials will continue to affect affordability of finished products among consumers,” the company said in an update.
In the animal feed segment, high input costs that are passed on to farmers have forced many to turn to alternative feeds for their livestock, hurting revenues of mainstream millers.
