Mumias Sugar’s pre-tax earnings for 2012 have dropped 33 percent to 1.8 billion shillings which is 43 percent lower than what Standard Investment Bank (SIB) had predicted the sugar producer would earn for the year ended June 30^th. The situation was little changed with revenue which despite climbing 6 percent to 18.7 billion, was still below SIB’s 21 billion shilling year-end forecast.

Mumias’ fincial performance was hurt by lower cane and sugar output, which declined 15 and 27 percent respectively from the 2011 financial year. Sugar output was at 172.6 tonnes which was 2.2 percent short of SIB’s estimated 176.4 tonnes.

“…margins came in below forecast weighed down by the disconnect between declining sugar prices and high price of purchased cane.” SIB also said in a research note. Between September and December 2011, world sugar prices fell 14 percent according to World Bank data.

Mumias says it is rolling out new cane varieties with faster and better yields as well as increasing the quantities of its pre-packed sugar which should fetch better prices.

The company is also optimistic of future earnings on a new ethanol distillery and water bottling plant both of which were commissioned during the 2012 financial year. From the ethanol plant, Mumias expects net revenues of 996 million shillings in the next financial year while 400 million in sales are expected from the water bottling plant.

Management had proposed a dividend of 50 cents per share subject to shareholder approval at the company AGM set for December.  Mumias shares have closed Friday at KES 6.35 per share.