The losses are 70% greater than those incurred by the company in 2010, and experts have warned that another equally disastrous year could put the company out of business.
Kekava has been losing money continually since 2007, with the total amount of losses in this period, including 2011, amounting to LVL8.219m (US$14.7m).
In 2011, the company suffered unprecedented losses, equal to LVL1m (US$1.8m) from the penalty tax.
Commenting on the current situation, the company’s management said the crisis was caused by errors in business dealings and slow reform of the production process.
“Unfortunately, the delayed reforms have led the company into a position where it was absolutely not ready for new challenges and upheavals caused by the constant increase in prices for energy and grain on world markets, as well as in the national market of Latvia,” said a spokesperson.
“These two items of expenditure are critical for the success of the enterprise, because they make up about 55-60% of total spending on economic activity. Our production efficiency is currently at a critical stage, characterised by a disproportionate amount of administrative apparatus, low production rates, irrational use of fixed assets and the inefficient sale [of the finished products].”
However, company bosses assured experts that Kekava would overcome the long-term trend of falling key performance indicators this year and said the company planned to earn profits of LVL500,000 (US$899,000) in 2012. They would not give details of the rescue plans for the company.