Sasini dips into loss on increasing costs and flat sales

• Sasini reported a net loss of Sh67.8 million compared to last year’s Sh391 million profit.
• Shareholders in the firm also saw their dividend payout drop by 25 per cent as Sasini announced a full-year payout of 75 cents per share compared to the Sh1 per share paid out last year.

Sasini has dipped into loss for the year ended September 2012 on flat sales and increasing costs, making it the seventh NSE-listed firm to report losses this year.

The coffee and tea firm Wednesday reported a net loss of Sh67.8 million compared to last year’s Sh391 million profit as its sales increased marginally by four per cent to Sh2.77 million from 2011’s Sh2.66 million.

Sasini’s costs this year stood at Sh2.87 billion compared to last year’s Sh1.68 billion, representing a 70 per cent increase.

It has not been a good year for agricultural firms as Sasini’s peers, Kapchorua Tea Company and Williamson Tea recorded a 43.3 per cent and a 65.4 per cent drop in net profits respectively for the six months to September due to high wage bills and a stable shilling.

READ: High wages, stable shilling hit tea firms

“The decrease in the operating profitability was mainly due to a substantial drop in prices realised from coffee compared to the prior year,” Mary Ekara, the firm’s company secretary, said in a statement.

“The results were also negatively impacted by rising costs of the main inputs particularly in relation to energy, farm inputs and labour. The drought experienced during the first three months of 2012 also resulted in a drop in the production of tea.

Shareholders in the firm also saw their dividend payout drop by 25 per cent as Sasini announced a full-year payout of 75 cents per share compared to the Sh1 per share paid out last year.

An interim dividend of 50 cents per share was already paid out in July. The firm’s share price at the end of trading Wednesday was Sh11.70 having lost 8.26 per cent in value over the past six months in a period where most counters have recorded double digit growth on the recovery of the Nairobi bourse.

It has not been a good year for listed firms and their shareholders after blue-chip companies such as Kenya Airways, KenolKobil, Total and Longhorn posted losses. Other companies that also posted losses were East African Portland Cement and Express Kenya.

The increased profit warnings highlight the challenges corporate Kenya is facing in an economy that is feeling the weight of expensive credit, high inflation, and political jitters linked to next year’s General Election.

READ: Profit warnings at NSE-listed companies hits 10

Sasini is now eyeing the real estate market to reduce the influence of weather and volatile coffee prices on its earnings with the agro business accounting for more than 90 per cent of its sales.

Sasini has singled out approximately 1,000 acres of land in Ruiru that is currently under coffee for the project.

“The board decided that developing the land is a worthwhile venture and we are only holding back until commercial bank’s interest rates are favourable enough for us to borrow funds,” said James McFee, the chairman of Sasini in an earlier interview with the Business Daily.