Mumias Sugar has reported a loss before tax of 3.4 billion shillings in 2014, from 2.2 billion shillings last year, blaming weaker sugar prices.
The company says sugar prices fell due to an influx of illegal sugar imports and a shortage of cane following a poor harvest.
“Availability of good quality cane continued to be a major challenge as a result of decreased areas under cane, declining cane yield per hectare and cane poaching,” the company managing director Cotts Ottollo told an investor briefing in Nairobi.
Kenya has used high tariffs to protect its sugar farmers but the policy has encouraged smuggling of cheaper sugar imports.
“The increase in revenue is attributed to higher sugar and ethanol sales volumes in the period,” managing director Cotts Ottollo said.
Mr Ottolo said the firm’s decision to enter into a 10,000-tonne sugar importation deal from Sudan earlier in the year turned bitter, costing the miller about Sh1 billion.
The company produced 172,326 tonnes of sugar, representing a 17 per cent increase over a similar period last year. Revenues went up by five per cent to Sh11.8 million.
In a profit warning issued on Wednesday, Mumias Sugar said its annual loss would be more than 25 percent, and it would make management changes aimed at improving its financial performance.
Mumias said in June it had dismissed two top managers who were suspended in April while the company investigated “questionable sugar sale and importation transactions”.
AUTHOR:BEN GUMO