Unga Holdings, in a notice made public on Friday, noted that it was struggling to record profits and hence would declare redundancies.
In the notice signed on November 24, the company announced that employees would be fired across all its branches, including Unga Limited and Unga Farm Care.
The flour-making company remarked that in the first phase, 50 employees would be declared redundant in the move to restructure.
It further stated that, like other businesses in Kenya, it was struggling to stay afloat and to meet new challenges occasioned by the tough economic times.
“Our volumes and margins are down. Our sales, particularly for the Unga Limited business, have been below budget consistently, resulting in low capacity utilisation and high fixed costs that are no longer sustainable,” the company stated.
Unga Limited noted that for a time it was facing a challenge of remaining financially viable from both profitability and cash flow perspective.
“We have worked on several initiatives to bring our costs in line with anticipated business performance, but despite this, it has become apparent that we also need to restructure our organization. This will result in loss of job,’ the company told its employees.
Unga Holdings remarked that it would use objective and quantifiable selection criteria that will include skill, ability and reliability in deciding on the workers to retain.
Affected workers were advised to seek a counselling programme provided by the company at no cost to the employee.
“We would like to thank you all for your continued professionalism during this difficult period,” the company told employees facing imminent job loss.
The decision to fire employees was made five months after the company issued a profit warning.
“Scarcity of locally sourced raw materials led to increased importation at higher global prices. This led to increased production costs which could not be fully passed to the consumers,” the company remarked during the profit loss warning.
Additionally, the company had noted that it was making losses due to the tough economic environment exacerbated by the depreciation of the shilling against the dollar.
Unga Holdings noted that the weakening of the Shilling had led to margin erosion, high forex losses and increased interest expenses.
