March 1, 2012 / 8:31 AM / 6 years ago

Kenya's Unga H1 pretax slips on grain costs

NAIROBI, March 1 (Reuters) - Kenyan flour miller Unga Group Ltd on Thursday posted a 7 percent drop in first-half pretax profit to 344.3 million shillings ($4.1 million) due to the high cost of grain.

The miller said maize margins were weak due to grain costs, volume losses and an inability to pass these costs on to its customers. It forecast a better outlook for the rest of the year though it said currency exposures remained a threat.

Wheat and animal nutrition margins fell compared with the same period a year before, after consumers and farmers with reduced purchasing power opted for cheaper alternative products.

Turnover rose by 34 percent to 8.42 billion shillings for the six months to December from the same period a year ago, but operating profit dipped to 213.8 million shillings from 356.5 million, the company said in a statement.

“Maize margins remained weak in the first half of the year due to high grain costs, related volume losses and inability to pass the costs on,” it said.

“New product launches and marketing programs will support business development in the second half of the year.”

Earnings per share rose marginally to 1.97 shillings from 1.94 shillings. The firm’s directors did not recommend payment of an interim dividend.

Shares in Unga were unchanged from Wednesday’s close at 9.05 shillings. ($1 = 83.1000 Kenyan shillings) (Editing by David Clarke; Editing by David Holmes)

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