28 August 2014

Kenya: Lower Tea Prices Hold Down Kakuzi's Profit

PUBLICLY traded agricultural firm Kakuzi yesterday reported a 36.5 percent dip of its half-year profit after taxation for the period ended June 30 to Sh49 million compared with a corresponding time last year.

The firm that mainly cultivates and trades in tea, pineapples, avocado, select nuts and livestock blamed the drop on "lower tea prices and increased cost charges to revenue on (621-hectare) Macadamia as early planted fields come to maturity".

Chairman William Tarplee said while tea production was slightly depressed, the prices were "very disappointing".

A kilo of tea was priced at an average Sh198.42 over the five-month period of this year, declining by 18.7 per cent or Sh45.60 compared to the Sh244.02 a year ago, data collated by Kenya National Bureau of Statistics showed early this month.

"The more mature macadamia plantations are showing good flowering and if this results in an increase of our nut in shell production, we may bring forward the construction of our cracking facility," he said in a note to investors.

Avocado nonetheless registered a 40 per cent jump in production with a rise in prices, the 4,000 heads of cattle returned a "small profit" while the joint Pineapple venture with Delmonte "gave satisfactory returns", Tarplee said.

"The impact of our herd size in the future is not yet fully established as we proceed with our arable venture which is now cleared on some 550 hectares of what was mainly livestock grazing land," he said.

Kakuzi's share price at Nairobi Securities Exchange remained largely unchanged yesterday trading at Sh165.


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