• Lower volumes of unharvested avocado crop resulted in a reduction in the fair value adjustment
• Macadamia results however improved as a result of increased production and firmer prices
Agricultural firm Kakuzi has posted a 9.2 per cent drop in after-tax-profit for the year to June occasioned by low tea prices at the Mombasa auction.
The listed firm has announced a Sh245.6 million net profit for the period, a dip compared to Sh270.5 million it reported in a similar period last year.
This is despite a slight growth in sales which closed the period at Sh619.5 million compared to Sh613.1 million last year.
"Revenue from tea declined due to lower production and a weak market,” Kakuzi said in its financial statement released yesterday.
Ita said while there was an increase in revenue from avocado sales, lower volumes of unharvested avocado crop resulted in a reduction in the fair value adjustment compared to the prior period.
The results were also impacted by the write back of provisions made in prior years, amounting to Sh103.2 million.
Macadamia earnings however improved as a result of increased production and good prices.
According to the firm, the sale and export of avocados, the main income stream for the company is gaining momentum.
“The sale and export has begun in earnest and whilst the market prices look to be improved over last year, the impact of reduced volumes in comparison to 2018 will be unknown until later in the year,” it said.
The company produces tea, avocados, macadamia and trees besides keeping livestock. It this year ventured into blueberries as it seeks to grow earnings and expand its portfolio of produce.
Kenyan tea prices have this year slumped to their lowest in the last five years dipping to a low of US$1.80(Sh185)per kilogramme, compared to an average US$2.26(Sh233.25) per kilo last year.
Kakuzi's 2018 profit declined 18.6 percent to Sh481 million as reduced avocado prices owing to oversupply in the European markets affected its performance.
Revenues however rose to Sh3.15 billion from Sh2.82 billion the previous year.