Dubai: The Dubai-based dairy products brand Unikai has drastically cut down on the discounts as one of the first steps in heading back to profitability. The company, whose brand is hugely popular in the value-for-money space, had racked up accumulated losses of Dh21 million plus at the end of the first six months of 2020.
Apart from reducing discounts offered on all products, Unikai’s management is also shifting from “low-margin products and loss-making customers,” the company said in a statement to Dubai Financial Market. “These cost savings initiatives improved gross margins and also resulted in savings in admin, selling and distribution expenses in first-quarter 2020 by Dh3.4 million as compared to 2019.” For the second quarter, the company turned a profit of Dh3.46 million.
Losses from the past
The company made a point that much of its accumulated losses stem from 2018. It blames these on the “additional discounts” it had to give to the trade to compete in the market. Plus, there were the accounting changes brought on by IFRS-9, especially on expected credit losses.
But the first-half of 2020 has been no easy ride, and Unikai says the impact of the pandemic did result in an “increase on the accumulated losses”.
Going forward, it expects to see better results from the change in focus, which could result in “increasing market share on profitable products”, while “customer and cost savings measures in place: would push it back into positive earnings.