Workers at Unga Ltd in Eldoret, in Keya’s Rift Valley. The 113-year-old company is close to the brink of falling in the red. PHOTO | JARED NYATAYA | NMG Regional flour maker Unga Group Holdings Ltd has branded its bakery business “unsustainable” and declared a staff redundancy plan. This is after its revenues were hit hard by a difficult operating environment occasioned by the Covid-19 pandemic, cheaper local brands, imported grain from Uganda and delayed payments from the Kenyan government.
The company, which is listed on the Nairobi Securities Exchange (NSE) revealed through its integrated report for 2020 that the staff layoffs will help breathe new life into its operations as the 113-year-old milling giant teeters on the brink of falling in the red.
According to the report, an undisclosed number of employees, largely those in permanent employment, will be affected by the layoffs expected to be completed by June 30.
Unga attributes its weakening financial position to restructuring costs, reduced demand for its products, increased cost of raw materials, and delayed payments from Kenya for grain supplied in support of the government-led maize subsidy programme more than three years ago.
Others include depreciation of the Kenya shilling against the dollar, which has subsequently impacted importation costs and led to substantial forex losses and the stiff competition from cheaper brands resulting in the company posting reduced margins.
“The management has spent a significant amount of time planning for our ‘new normal’. The further adoption of both plant and office automation is a high priority and will receive funding over the short to medium term,” said Isabella Ochola-Wilson, Unga Group chairperson.
“Unfortunately, layoffs will be necessary but since a significant proportion of our production-related labour force is outsourced, we will be able to make headcount adjustments quickly. We expect to declare some redundancies among our permanent staff early in the new (2020/2021) financial year,” she added.
Last year the company, which has operations in Kenya, Uganda and Tanzania, let go of 122 workers, mostly in production (72) and sales and distribution (50), pushing up the service gratuity kitty by Ksh15 million ($140,186.91) and “other” staff costs by Ksh51 million ($476,635.51), according to the Group’s 2020 annual report. Way forward
Unga Group is seeking to cut costs, improve operational efficiency and prevent further financial bleeding after its net earnings for the 12 months to June 30, 2020 dropped by 88 percent to Ksh66.1 million ($617,757) from Ksh544.81 million […]