Mumias Sugar Company (MSC) has announced new measures to shore up profitability and earnings to the shareholders.
But the country’s largest miller maintains that canepoaching and smuggling of cheaper sugar imports into the country remains a major challenge.
As part of the new measures to turn around its fortunes, MSC has introduced early maturing cane varieties, a new fertiliser regime and remodelled farmer service delivery channels in order to increase the area under cane and cane yields.
The company is also increasing the quantities of its branded sugar in order to increase its market share.
The company, which controls more than 50 per cent of the country’s total sugar production, is also setting up additional cane buying centres in its cane zone in order to facilitate sugar cane collection from the fields.
The company said the additional cane-buying centres would minimise in-transit losses and reduce the incidence of cane poaching.
Chief Executive Peter Kebati said the company would also be launching bottled water into the market next month in order to bolster its earnings and maintain profitability in the competitive sugar industry.
“The board of directors is confident that the company will soon return to profitability and will continually review the various business strategies in place to ensure sustainability,” Kebati told a media briefing in Nairobion Tuesday.
Cane poaching and smuggling of cheaper sugar imports into the country saw the company return a loss before tax of Sh2.23 billion during the financial year ended June 30 compared to a pre-tax profit of Sh1.76 billion in the previous year.
Kebati attributed the dismal performance to shortages in the quantity of cane supplied and low plant utilisation.
He said the company reported a decline in revenue mainly due to lower sugar prices during the year, lower sugar production as a result of declining raw materials and an influx of imported sugar.
Kebati said increased sugar imports during the last quarter of the financial year led to decline in prices and higher stock holding.
“Cane availability has been a challenge due to declining yields, alternative land use and cane poaching by competitors. This was exacerbated by the political climate leading up to the March 4 General Election, which hampered harvesting of cane from the field,” he said.
According to the company’s audited financial statements, turn-over fell 20 per cent to Sh14.93 billion from Sh18.7 billion in the previous year.
The company produced 147,320 tonnes of sugar, representing a 15 per cent decline from the previous year’s 172,614 tonnes.
Revenues from the co-generation plant declined 30 per cent to Sh305 million mainly due to a decline in fuel available (bagasse) and increased demand for the fuel by the new ethanol distillery.
The company generated Sh331 million from ethanol sales compared to Sh1.5 million in the previous year. The directors have not recommended dividend payments.
By JAMES ANYANZWA, The Standard