This archive report was first published on 26 August 2019.
Flame Tree's Financial Struggles ¶
On August 26, 2019, Flame Tree Group, a diversified manufacturing and distribution company, reported a significant decline in its net earnings. The company's net profit for the first half of 2019 plummeted by 75% to Sh9.59 million, down from Sh39.9 million in the same period in 2018.
The decline in net earnings was largely attributed to higher operating expenses, which outpaced revenue growth. Sales and distribution costs rose from Sh182 million to Sh207 million, while other expenses increased from Sh19 million to Sh32 million.
The company's operations in Ethiopia and Mozambique were negatively affected, while its snacks unit struggled due to drought-related potato shortages and price increases, impacting both production and margins.
However, the company's CEO, Heril Bangera, expressed optimism about the second half of the year, citing a positive trend in sales and margins over the past two months. He stated, '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.'
Flame Tree Group has taken steps to mitigate its financial struggles, including the purchase of additional trucks to reduce logistics costs in Kenya and the expansion of its cosmetics business in Mozambique. The company has also launched a new product range in ZOE lotions and opened a new SuzieBeauty store at Sarit Center.
