Nairobi Securities Exchange (NSE) listed agricultural firm Kakuzi, has issued a profit warning, indicating that its financial performance for last year will decline by at least 25 per cent compared to 2020.
The alert indicates that its profits in 2021 will be the lowest over the past six years at below Sh470 million. Since 2016, the company has made an average of Sh594 million annually, with the lowest year- 2018- having recorded a profit of Sh481.6 million.
Kakuzi board chairman Nicholas Ng’ang’a, issued the alert as the firm blamed poor yields on its Hass avocados and low prices in its European markets for the waning performance. “This profit warning notice arises from trading information, market forecasts and the preliminary unaudited full-year financial results, among other data sources currently at the board’s disposal. We, therefore, wish to report that our earnings for the year ended December 31, 2021 will potentially be at least 25 per cent lower than that reported for the year ended December 31, 2020,” Mr Ng’ang’a said in the statement.
He said the firm’s Hass avocado production in 2021 fell by 18 per cent compared to the yields in 2020.
“The anticipated drop in full year earnings is principally as a result of Hass avocado production, which is prone to a year of low production after a year of high production (a principle known as biannual bearing). As announced in the half year trading results commentary, the lower yield was anticipated,” read the statement.
The firm also blamed an oversupply of the product from Peru and Columbia to Europe as having slashed prices, but indicating that other crops performed well.
In the 2021 half year results, Kakuzi reported a 40 per cent (Sh78.1 million) drop in its profits, from the Sh272.8 million profit reported in the six months to June 2020.
Between January and June last year, the agricultural firm saw its total avocado sales to outside markets drop by 101 per cent (Sh168 million), as sales to the UK and European markets declined by 112.2 per cent (Sh154 million).
Disruption of its supplies to Britain in September last year due to human rights abuse claims also affected earnings.
