Listed Flame Tree Group posted a loss of Sh90.6 million in the first half of the year ended June 2024, as higher debt servicing costs erased a Sh6.7 million profit from last year.
The company’s financing costs rose by 48.1 per cent to Sh181.3 million from Sh122.4 million previously, as the company was impacted by the high interest rate environment.
Higher debt servicing costs – linked to increased borrowing in 2022 to finance raw material purchases after prices rose – wiped out Flame Tree’s operating profit of Sh90.7 million, which was, however, lower than the Sh129.2 million previously.
Flame Tree is currently pursuing a debt restructuring to manage high costs that have constrained its cash flow and limited investment opportunities.
“While this (borrowing) has been critical to maintaining production levels, it has also resulted in higher financing costs, which has constrained cash flow and limited growth opportunities,” the company said in a statement yesterday. “The ongoing debt restructuring process aims to reduce these costs, but the group continues to focus on other strategic initiatives that will drive future growth and capitalize on new market opportunities.”
The company’s borrowings cover long-term and short-term facilities as well as bank overdrafts and form part of Sh2.6 billion of total liabilities at end-June 2024.
Flame Tree’s sales revenue for the period fell slightly to Sh2 billion from Sh2.1 billion a year earlier, due to disruptions, including flooding, that affected production at some of its sites.
However, the decline in sales volumes was partly offset by a slight decrease in cost of sales to Sh1.3 billion from Sh1.4 billion.
Flame Tree Group CEO, Heril Bangera, said the company will optimise resources to drive growth and capitalise on new market opportunities.
The company, listed on the Growth and Enterprise Market segment of the Nairobi Securities Exchange, is a manufacturer and distributor of a diverse range of products including plastic tanks, packaging, cosmetics, snacks, condiments, playground equipment, home equipment and school furniture.
The company’s brand portfolio includes Roto Tanks, Jojo Plastics, Zoe, Cerro, Alana Skin, Siora, Happy’s, and Buildmart.
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