ALARM RINGS AT KENYA'S UCHUMI SUPERMARKET PLC

From the figures for the half year to December 2017 released on Tuesday, it looks like alarm bell is presently ringing over Kenya's Uchumi Supermarket PLC fortunes and chances in the full year to June 2018.

From the look of things, Uchumi is doing all it can to stay afloat but so far, its best do not seem to be enough to emerge from loss league.

Instead, by the half year, loss before tax grew by 63.66% to Ksh 895.18m from Ksh 547.31m previously.

As a result, now for every Ksh 100 earns as net total income, it lost Ksh 170 compared to only Ksh 29.6 loss by the first of previous financial year.

In the first instance, Uchumi Supermarket's net total income tumbled by 71.5% to Ksh 526.97m within the first half but cost of sale dropped by a lower 67.3% to Ksh 379.997m.

The net result was 78.6% decline in gross profit within the period to Ksh 146.97m from December 2016's Ksh 686.36m.

Then in spite of branch network rationalisation, administration expenses decreased by only 15.5% to Ksh 1042.15m; no where near the % decline in both net income and cost of sale.

The end result was the build up of more cumulated losses as the half year one mounted.

Dr C Ngahu, the Chairman of the board of directors asserted that reductions in costs were as a result of rationalisation but unfortunately, even the drops thus recorded, did not come close to % dive in total income.

It is a wonder of sorts though that Uchumi working capital deficit only ended up widening to Ksh 5998.7m from Ksh 5112.6m in spite of the higher loss within the period.

But that does not raise better hopes of Uchumi generated enough cash from operations during the rest of the financial year. In the interim period under review, cash generated came to Ksh 340.11m as against N1114.95m by December 2017.

So the alarm may continue to ring till the year ends in June.

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