Unga Group closes down five in-store outlets, cites economic slow down

The closure spells a doom for dozens of jobs in the capital Nairobi.

 

This, according to the company’s statement sent to the press, is in a bid to bolster the diminishing operating margins.

The bakeries slated for closure are majorly spread in Nairobi’s Nakumatt Supermarkets, a once greener market for its products. The targeted bakeries, the company said, are owned by Ennsvalley Bakery Ltd.

As a result of this new development, Unga Group will instead be supplying products from its central commercial kitchen located in Nairobi.

“This move is motivated by the need to consolidate certain business operations as the central bakery in Nairobi and Nakumatt’s intention to renovate the outlets,” reads part of the statement.

Ennsvalley Bakers, however, has said it will intensify operations in in-store bakeries located at Nakumatt stores at Nairobi’s Mega, Galleria, Junction, Thika Road Mall and Village Market branches. Consumers in the coastal region, it says will access services through the already running Cinemax outlet in Mombasa.

Expansion plans

The new development means that the snacks maker will now throw its earlier plans to have more footprints in the country and concentrate on maximizing the operational margins.

A source at the company which sought anonymity has told P Live Kenya that this is likely to have a ripple effect to the workforce at the flour products maker, especially on the workforce.

Many companies have in the recent past decided to shade off some of the staff as a cost cutting tool, which many economists argue does not solve the problem.

Earlier, Unga Limited had plans to expand its presence in supermarkets, the latest development being tapping into the expanding Chandarana Supermarkets. Beginning 2015 after Unga Group acquired a 52 per cent stake in Ennsvalley Bakeries, staff costs rose by 51.8 percent in the year to June 2016, marking a struggling moment for the entity.

Ennsvalley, however, the major buyer form Unga Group is currently facing competition from traditional millers.

Growing list

The closure of Unga Limited’s bakery units trolls in the ongoing massive adjustments especially for the Nairobi Securities Exchange-listed companies which towards the end of January started selling assets to shore their medium term performance, thanks to the slow economic growth.

Already wheel manufacturing company in Nairobi, Sameer Africa, beer brewer East African Breweries Limited (EABL), Sasini Tea and Standard Chartered Bank Kenya have made it to the list of companies that have raised a total of over Sh12 billion from disposal of land and buildings in the past five years as short term performance dipped.

A retail chain Uchumi Supermarkets and Nakuru based battery maker Eveready East Africa are in the process of selling decades-old land holdings for billions of shillings to raise money for flagging operations.8

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