Unga Group makes first profit in two-and-a-half years at Sh82 million

Animal and human food processor Unga Group posted a Sh82.17 million net profit for the six months ended December 2024, marking the first profit in two-and-a-half years.

The half-year net profit was an improvement from a net loss of Sh341.6 million that the firm had posted in the preceding similar period, halting a streak of losses that started in the first half of its 2023 financial year. 

Prior to the latest results, the last profit was in the full year to June 2022 when it made Sh311.3 million.

Revenue for the period under review grew by four percent to Sh12.94 billion but the big drivers in the profitability was reduced cost of sales and lower finance expenses.

“Raw material supplies remained largely stable, ensuring steady product availability at prices lower than the previous period. Investments in brand development and enhancements to customer and consumer experiences are beginning to deliver positive outcomes,” said the firm in a statement.

The reduction in cost of sales helped Unga to book operating profit of Sh351.87 million compared with a loss of Sh32.23 million posted a similar period last year.

Unga’s finance costs, which includes interest expense on bank loans, overdrafts and trade finance, dropped by 46 percent to Sh225.77 million from Sh492.99 million.

“Furthermore, focus on improving commercial and operational efficiency has contributed significantly to profitability. The stability of the Kenya Shilling has further mitigated foreign exchange losses,” added Unga.

The firm, which completed its solar project last year, said this move has contributed to the cost-saving initiatives. Unga had estimated that the project would deliver at least a 30 percent cut in energy cost savings.

Despite the improved performance in the half-year period, Unga says, challenges such as reduced disposable incomes, uncertainties surrounding the future availability and cost of raw materials and exposure to interest and currency risks continue to pose risks to the business.

“Moving into the second half of the fiscal year, strategic focus will be on consolidating our existing investments while reinforcing and expanding the group’s market position. Streamlining operations to enhance agility within the business will continue,” said the firm.

Unga’s share price at the Nairobi Securities Exchange has gained by 63.6 percent to Sh24.55 since the start of the year, making it one of the top gainers.

At 63.6 percent, Unga’s year-to-date gain is only dwarfed by Uchumi (123.53 percent), East African Cables (104.63 percent) and HF Group (77.38 percent).

palushula@ke.nationmedia.com