Unga Group posts US$570,000 half-year profit, breaking two-year losing streak

KENYA – Unga Group PLC, a publicly listed Kenyan food and animal feed manufacturer, has reported a net profit of approximately KES 82.17 million (US$570,000) for the six months ending December 31, 2024.

This marks the company’s first profitable half-year in two and a half years, a significant turnaround from the KES 341.6 million (US$2.37 million) net loss recorded during the same period last year.

The company’s revenue increased modestly by 4%, reaching KES 12.94 billion (US$89.8 million).

According to Unga Group, the primary contributors to this positive financial outcome were a reduction in the cost of sales and a substantial decrease in finance expenses.

Operating profit soared to KES 351.87 million (US$2.44 million), a remarkable improvement from the KES 32.23 million (US$224,000) loss reported in the corresponding period last year.

Additionally, finance costs, encompassing interest expenses on bank loans, overdrafts, and trade finance, declined by 46% to KES 225.77 million (US$1.57 million) from KES 492.99 million (US$3.42 million).

Unga Group attributes this financial rebound to stable raw material supplies, which ensured consistent product availability at lower prices compared to the previous period.

The company’s investments in brand development and enhancements to customer and consumer experiences have begun yielding positive results.

Furthermore, a focus on improving commercial and operational efficiency has significantly contributed to profitability. The stability of the Kenyan Shilling has also mitigated foreign exchange losses.

In December 2023, the company undertook a significant leadership overhaul, aimed at improving decision-making efficiency and operational streamlining.

Chairperson Isabella Ochola-Wilson emphasized that the restructuring focused on empowering employees and driving business performance, rather than merely cutting costs.

In a raft of measures, Unga Group has been progressively reducing its workforce over recent years, with employee numbers falling from 400 in 2022 to 285 by June 2024, citing that the company was struggling to record profits.

In line with its sustainability strategy, Unga Group completed a KSh 300 million (US$ 2.06 million) solar power generation project in 2023, covering its manufacturing sites in Nairobi, Nakuru, and Eldoret. This initiative has led to a 27% reduction in power costs, further bolstering the company’s cost-saving measures.

Despite these improvements, Unga Group acknowledges ongoing challenges, including reduced disposable incomes, uncertainties surrounding the future availability and cost of raw materials, and exposure to interest and currency risks.

In the upcoming fiscal periods, the company plans to focus on consolidating existing investments while reinforcing and expanding its market position. Efforts to streamline operations to enhance business agility will also continue.

Reflecting investor confidence, Unga Group’s share price on the Nairobi Securities Exchange has surged by 63.6% to KES 24.55 (US$ 0.17) since the start of the year, positioning it among the top gainers in the market.

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