Flame Tree net earnings fall 75pc on expenses

Diversified manufacturing and distributions company Flame Tree Group net profit in six months to June plunged 75 percent plunge to Sh9.59 million from Sh39.9 million in the first half of 2018.

Higher operating expenses amid a decrease in inventory saw expenses climb faster than revenues.

Sales and distribution costs rose from Sh182 million to Sh207 million while other expenses rose from Sh19 million to Sh32 million.

The company said its Ethiopia and Mozambique businesses were affected negatively while its snacks unit was hit by drought resulting in scarcity of potatoes and price increases. This affected both production and margins.

“We have seen a very positive trend in the last 2 months both in sales and margin. Traditionally the second half of the year shows better performance than H1, and we are still targeting to push for final net growth in sales and Profit vs LY,” Heril Bangera, CEO Flame Tree Group said.

The company has bought an additional investment of 9 trucks to reduce logistics costs in Kenya while ramping up distribution of cosmetics in Mozambique and considerable increase in exports to Rwanda.

The firm’s cosmetics business turned around profits despite higher cost of sales due to Sh16 million paid in demurrage charges.

The company also opened a new SuzieBeauty store at Sarit Center and launched a new product range in ZOE lotions, hoping this have a positive impact on revenue in the second half of the year.

Flame Tree Group hopes to gain upwards of Sh216 million after revaluation of assets made by an independent company that brought Sh216.2 million of additional value to the trial balance.

Mr Bangera said the firm has increased investments in marketing with advertising campaigns in mainstream and online media platforms to boost revenues.