•Chairman Nicholas Ng'ang'a says shareholders have begun to enjoy the company’s diversification fruits even as plans to broaden revenue streams continue.
•Last year, the firm recorded a drop in avocado sales but gained from macadamia sales.
Shareholders of listed agribusiness firm–Kakuzi Plc have approved a Sh22 per share dividend for the financial year ended December 31, despite a 48.6 profit drop.
This represents a 22 per cent growth from the Sh18 per share paid out the previous year, making Kakuzi PLC one of the highest paying firms at the NSE.
The firm will pay a total Sh431 million, an increase from Sh352 million the previous year.
It is higher than the Sh319.7 million net profit for the year which fell from Sh622 million it posted in a similar period the previous year, blamed on reduced earnings due to lower avocado production and prices.
Its total sales for the year 2021 fell 8.6 per cent to Sh3.23 billion from Sh3.61 billion the previous year, its financial statement shows.
The firm recorded greater earnings from macadamia sales during the year as a result of increased yields from its young orchards, according to chairman Nicholas Ng’ang’a.
The historic dividend payout against a drop in profit hence means the firm will tap into Retained Earnings (RE).
This is the accumulated portion of a business’s profits that are not distributed as dividends to shareholders but instead are reserved for reinvestment back into the business.
Normally, these funds are used for working capital and fixed asset purchases (capital expenditures) or allotted for paying off debt obligations.
Yesterday, management said shareholders have begun to enjoy the company’s diversification fruits even as plans to broaden revenue streams continue to be scaled up.
Speaking at the 94th Kakuzi PLC Annual General Meeting (AGM) held virtually, Ng’ang’a assured the firm’s shareholders that strategic plans had been activated to accelerate and enhance shareholder returns, by diversifying the variety of produce delivered to both the domestic and international markets.
The diversification strategy features the production of superfoods such as Macadamia and Blueberries and is now being complemented with the rearing of goats for meat, agroforestry and a range of retail products for the domestic market.
Focus on a diverse variety of agricultural produce, Ng’ang’a told the firm’s shareholders will further insulate Kakuzi’s dependence on traditional produce such as avocado and tea.
The diversification strategy, he added will be underpinned by the strict adoption of climate-smart agricultural (CSA) practices aimed at increasing productivity, enhancing resilience, and reducing emissions.
In the last financial year, potentially poor shareholder returns, he said had been mitigated by the positive income realised from some of the firm's diversification strategy crops.
In the past, the firm derived its income from coffee and tea sales and then moved to avocados in the 1990s.
“ We are now enjoying significant revenues from Macadamia crops as well as forestry products with further contributions coming from blueberry, livestock and value addition opportunities coming in time,” Ng’ang’a said.
To sustain the value contribution of its flagship Hass Avocado crop, Kakuzi is undertaking an 18 per cent expansion for the popular fruit.
The ongoing field developments will see the expansion of avocado trees from the current 980 ha to 1160 ha in the next four years.
“In 2022 a further 60 hectares of avocados and 100 hectares of macadamia will be established,” Ng’ang’a said.
The firm plans convert its land previously under pineapple production to the two crops.