Oct. 16 (Bloomberg) -- Mumias Sugar Co., Kenya’s largest miller of the sweetener, dropped the most since Sept. 3 after Business Daily reported sugarcane cutters went on strike, raising concern that production will be hurt.
The stock fell 4 percent to 3.60 shillings by the close in the capital, Nairobi. Almost 800,000 shares were traded, equal to 78 percent of the three-month daily average volume.
About 16,800 cutters halted work, demanding compensation for harvesting cane that was delivered to other millers, the Nairobi-based newspaper reported yesterday, citing Julius Wangwero, chairman of the Cane Cutters Association. A message left on the voicemail of Mumias’ marketing manager, Pamela Lutta, wasn’t immediately returned.
“Investors are reading into that news because it will affect the company’s recovery,” Davis Mika, an analyst at Nairobi-based Contrarian Investing Kenya Ltd., said by phone. “If there is no cane the factory will have to be closed down and that will lead to some losses.”
Mumias reported a loss of 1.67 billion shillings ($19.6 million) in the 12 months through June from a profit of 2 billion shillings a year earlier. Sugar output declined 15 percent to 147,320 metric tons while the volume of processed cane dropped 10 percent to 1.72 metric tons.
Lawmakers from western Kenya, where sugarcane is grown, asked President Uhuru Kenyatta to summon directors of company to explain its “poor performance,” according to a July 31 statement from the presidency.
The company is Kenya’s second-worst performing stock this year, falling 26 percent. The FTSE NSE 25 Share Index rallied 35 percent in the period.
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