Unga Group Ltd (NSE:UNGA) declares sweetened year-end dividend

Unga Group Ltd (NSE:UNGA) has declared year-end dividend of Sh1 per share for the fiscal year ended June 2015. The dividend amount is better than for the last two years. Unga's newly reported year was characterized by gains as the company also reported that its revenue and profit rose by respectable margins compared to the prior year.

Unga has paid annual dividends consistently over the past several years, but the latest declared dividend amount is higher than what the company paid out in the last two fiscal years. The Sh1 dividend declared by Unga is 25 cents over the dividend paid by the company in fiscal year-ended June 2014 and year-ended June 2013. 

The impact
Unga’s sweetened dividend amount is expected given shareholders another exciting reason to stick with the stock. The move is also likely to attract new income investors into the stock. Income investors target dividends gains in their stock investments. The other way to profit from stock investment is through capital gain. 

Net income rises sharply
Revenue and earnings gains backed Unga Group Ltd (NSE:UNGA)’s Sh1 dividend. The company generated more than Sh18.7 billion in sales, up more than 10% from last year’s sales of Sh17 billion. Net income came in at Sh621.9 million, up more than 31% from last year. Earnings per share (EPS) for the year were Sh5.27, up from Sh3.65 in the prior year. EPS is the result of net income dividend by outstanding shares.

Adverse impacts
Unga’s fiscal year-ended June 2015 gains were offset by larger costs of borrowing with finance cost almost doubling to Sh40.2 million as opposed to Sh26 million in last year. Unga was also hit by unfavorable currency fluctuations with foreign exchange losses rising sharply to Sh186.4 million from Sh15.8 million in the prior year.

According to the management, the first three quarters of the year were favorable, mostly characterized by fairly stable maize prices and improved availability of the grain compared to last year.

Expansion plans

Unga Group Ltd (NSE:UNGA) is plotting more future growth with the management intending to expand the Eldoret grain storage facility. Renovation of the Eldoret plant is expected to add more capacity and improve supply chain efficiency, which should have a favorable impact on the bottom line in coming years.