Unga Group Plc has returned a Sh293.477 million profit during the financial year ended June 30, 2021.

The results reflect a 344 per cent increase from last year’s results, where the group made Sh66.161 million.

It attributed the improved results partly to payment of grain in support of the government-led maize subsidy programme in 2017, and settlement of tax refunds from the government.

These contributed to the 1 per cent increment in group’s revenue to Sh17.8 billion from Sh17.7 billion in June 2020 and subsequently improving the year’s profit.

In the year under review, operating profit increased to Sh616.2 million in 2021, from Sh229.8 million in June 2020 in what  the agricultural holding company said was a reduction in margins, re-organisation and finance costs, while its profit before tax grew to Sh485.2 million from Sh118 million recorded in 2020.

“Compared to the previous year, interest expense was reduced because of restructuring of banking facilities,” it said in the financial results.

According to the firm, depreciation of the shilling against the US Dollar impacted importation costs, leading to foreign exchange (Forex) losses.

In the short term, the firm said performance is expected to remain subdued because of the prevailing high raw material prices, particularly for wheat and soybean.

According to the notice, poor harvest of wheat and adverse fiscal measures imposed by some leading exporting economies resulted in a 30 per cent increment in wheat prices.

However, with the onset of the local maize harvest, maize prices remained stable from the second quarter to the end of the financial year.

Unga welcomed the zero-rating of flour effective July 1, 2021, saying the move will cushion consumers against price inflation. “Animal feeds, however, remain Value Added Tax  exempt, and this negatively affects prices of farm inputs,” it said.

Before the end of the financial year, the group entered into two joint ventures to expand its aquafeed production and marketing capability in the region, manufacture of animal feed as well as expanding the sale of feed premixes in Uganda. 

An agreement was also reached with Big Cold Kenya Ltd to buy its bakery business and assets.