Kakuzi profit hits Sh644m as Del Monte claim settled
Profit increases by 65.7 per cent from Sh388.6 million last year owing to good tea prices
Kakuzi Ltd grew its earnings 65.7 per cent in the year ended December 2011, helped by a weak shilling, favourable tea prices and the resolution of a dispute with Del Monte Kenya.
The listed agricultural firm’s net profit grew to Sh644.3 million in 2011 from Sh388.6 million in 2010.
“The profit is considered satisfactory and has been favourably affected by the exchange rates together with reasonable prices for both tea and avocado,” the company said in a statement to the Nairobi Securities Exchange (NSE).
Its turnover increased by 12 per cent to Sh2.3 billion due to dry weather that reduced tea output, lifting demand.
The company’s earnings were also boosted by Del Monte’s withdrawal of a Sh109 million charge to Kakuzi relating to an alleged error in calculating the selling price of pineapples it supplied in 2007 and 2008.
Kakuzi had created a provision in their statement to pay Del Monte this money. “It should be noted that the profit reflect a favourable write back of Sh109 million due to the satisfactory conclusion of the claim against Kakuzi made by Del Monte ,” the company said.
The directors recommended the payment of a first and final dividend of Sh3.75 per unit up from Sh2.5 the previous year as its total dividend payout rose by 50 per cent to Sh73 million.
Analysts said the company’s 2012 earnings and share price may not be as promising if the weather is unreliable and the shilling remains strong. “The firm may not be able to return such strong earnings this year,” said George Bodo, a research analyst at Apex Africa Capital. Kakuzi’s share price increased by Sh2.5 to Sh79.5 after the results were released.
The company’s market capitalisation, as measured by the total value of the its shares on the bourse, has increased by 26 per cent in the last one year to Sh1.55 billion, according to latest data from NSE.
The company’s retained earnings climbed by 25 per cent to Sh2.3 billion. Earnings per share rose 75 per cent to Sh28.06.
Other tea companies such as Sasini, Williamson and Kapchorua also posted better earnings owing to the weak shilling and increased demand in the global markets.
Last year, tea firms were hit hard because exports were held up at the Mombasa port following chaos in Egypt, one of the leading buyers of Kenyan tea. Other leading buyers are the United Kingdom, Afghanistan, Sudan, Russia and Yemen.
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