Kenyan flour miller Unga Group Ltd announced an 18.7% drop in full-year pretax profit to US$6m.
The group attributes the drop to the high cost of grain, and is warning that margins will decrease even further.
The miller said margins in the animal nutrition segment had been hit by a volume decline in poultry feeds as farmers withdrew from the market following low demand for meat and eggs.
Margins were also being depressed by increasing number of small millers entering the market.
"Gross profits declined across all segments due principally to commodity prices inflation. Demand for feed premixes and animal health products was strong."
Unga’s Nairobi Feed Plant was upgraded in March, and is geared up to handle larger volumes in the high-value pelleted feed category.
"Continued product cost inflation is expected due to shortages in the world commodity market and currency risk," the miller said.