The stock plunged 18 percent to 4 shillings by 11:40 a.m. in the capital, Nairobi, poised for the biggest decline since at least November 2001. About 1 million shares traded, 105 percent of the three-month daily average volume, according to data compiled by Bloomberg.
Earnings for the year through June will be “materially lower” than the previous year, after drought conditions led to cane shortages and “poaching” by competitors, Kenya’s only publicly traded sugar company said yesterday. The company posted a loss for the six months through December of 1.1 billion shillings ($12.8 million), compared with a profit of 825.2 million shillings a year earlier.
“They gave a profit warning on the performance for this year and that is what has brought about the panic in the market,” Eric Munywoki, a research analyst at Nairobi-based Old Mutual Securities Ltd., said in a phone interview. “It is a problem that is likely to persist in the medium term because they plan to grow their own sugarcane and it will take 18 to 24 months before harvesting.”
Mumias’ price target was cut to 7.40 shillings a share from 9.87 shillings at Old Mutual.
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