unga group

Unga Group has announced its regrettable decision to initiate a workforce reduction, affecting approximately 50 employees. 

This move is propelled by formidable challenges in volumes, margins, and sales that the company has been facing. The decision is a response to the dynamic economic landscape and aims to recalibrate resources in alignment with the company’s operational needs and sustainability goals. 

The company expresses its sincere concern for the affected employees and emphasizes the necessity of this measure to ensure long-term viability in the face of prevailing market challenges.

Unga Group PLC, a Kenyan holding company founded in 2000, is a significant player in the industry, specializing in the production, distribution, and milling of wheat, maize, and animal nutrition products. 

With a rich history of over 110 years, Unga Group is contemplating a transition from a grain milling business to a broader food company. The company has strategically invested in modernizing mills, upgrading equipment, and expanding its product range, showcasing resilience amid industry dynamics.

Unga Group’s decision to lay off around 50 workers underscores the company’s efforts to adapt to changing market conditions and ensure its long-term sustainability. The decision aligns with the company’s focus on addressing operational challenges and optimizing resources to navigate a competitive landscape marked by evolving consumer preferences and economic conditions.

READ ALSO: Economic Resilience: Africa Development Bank Grants Kenya KSh 12.3 Billion for Recovery

Unga Group Limited (UNGA) faces significant financial challenges, as evidenced by a decline in volumes and margins. The company’s recent stock performance on the Nairobi Securities Exchange reflects a notable 50% decrease in the past year. 

With the current share price at 16.00 shillings and a 52-week range between 14.00 and 32.00 shillings, Unga Group confronts liquidity concerns, with a one-year liquidity of KES 4 million and a market capitalization of KES 1.2 billion. 

These financial indicators underscore the pressing need for strategic adjustments, such as the decision to lay off workers, to address the company’s operational and market challenges.

Several factors have contributed to consistently below-budget sales at Unga Limited, including increased competition, raw material price inflation, drought conditions, low staffing levels, and low morale. 

Resistance from lower levels, fear of job security and retrenchment, and failure to follow up on prospects have further compounded the challenges. The influx of small regional milling companies with lower costs, cheap imports, and increased imports of poultry and dairy products from regional markets have significantly impacted Unga Group’s sales. 

Rising costs, a low uptake of farm inputs, and a wheat grain price increase due to adverse weather, pandemic-related interruptions, and increased global demand have further strained the company’s financial performance.

Low capacity utilization has also adversely affected Unga Group’s operations, leading to various repercussions. The company faced a decrease in sales, prompting a significant workforce reduction, including 126 sales team members in 2022. 

This decline in sales and operational challenges contributed to a substantial drop in Unga Group’s share price, reaching a nine-year low. 

The company encountered financial hurdles such as high production costs due to a scarcity of locally sourced raw materials, reduced demand caused by the COVID-19 pandemic, delayed payments for grain supplied to support government programs, and significant restructuring and finance costs.

The layoff at Unga Group brings significant implications for the affected individuals. It results in job insecurity, potential financial strain, and impacts on livelihoods. Additionally, the workforce reduction may contribute to a challenging employment landscape, requiring the affected workers to seek alternative opportunities in an uncertain job market.

Unga Group remains committed to responsible employment practices despite the recent layoff. The company acknowledges the impact on affected workers and emphasizes its dedication to fair and ethical employment decisions. 

Unga Group strives to uphold responsible corporate conduct, considering the well-being of its workforce within the context of broader operational challenges.

Leave a Reply

Your email address will not be published. Required fields are marked *