UNGA Group is a Kenyan-listed company with a focus on flour milling and manufacturing of a human nutrition products and animal feeds. The group has operations in Kenya and Uganda.

UNGA has just released its 2019/2020 financial results and they are not the prettiest reading. Revenues steady but profits down over 80%. They are generating cash but lower than usual and are also conserving it by not giving a dividend for the first time in over five year.

These poor results have been driven partially by COVID-19 punching a hole in the economy but UNGA problems started prior to that.

The UNGA bakery business (Ennsvalley) has been hit by new competitors in the Kenyan market and also that a lot of supermarkets that had housed them are struggling e.g. Nakumatt. The management has not yet shown a strategy to counter this beyond cutting costs by shutting down bakeries.

Demand for their animal nutrition products in Kenya has been affected due to farmers facing cheaper produce flooding the market from regional countries especially Uganda. This should not have affected UNGA too adversely considering they have huge operations across the East African region.

Overall UNGA has not yet shown an answer on how it will tackle the more competitive market landscape it finds itself in. Without a new strategy for retaining market share in East African kitchens, the path to better returns and dividends becomes hard to see.

Despite all this, the book value of the company is at 84 KES a share which is almost 3 times the share price at 30 KES a share as of October 2020.