Sasini issues profit warning after 86pc drop in half-year profit
Sasini coffee and tea products. The firm has issued a profit warning after half-year net profit dropped by 86 per cent. Photo/File
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After-tax profit for the six months to March 2014 fell to Sh28 million from Sh200m posted for a similar period last year.
NSE-listed agricultural firm Sasini issued a profit warning Friday after recording an 86 per cent drop in half-year net profit attributed to low tea prices and a decline in coffee volumes.
The firm’s after-tax profit for the six months to March 2014 fell to Sh28 million from Sh200m posted for a similar period last year.
“The results for the first six months are more than 25 per cent lower than for the same period last year. Consequently, there is good reason to expect that the result for the full year will also be more than 25 per cent lower than the previous financial year should the prices of tea remain depressed,” Sasini said in a statement.
An oversupply of tea in the market has resulted in reduced prices at the auction.
“Our tea division has however met its projected production targets for the period but due to poor performance in the auction, fell far below the target in price realisation,” the firm said.
The prices are further likely to be suppressed by low demand as Kenya’s traditional buyers head to summer and may not have to buy more tea for consumption as they would in winter.
Pakistan, the UK, and other European countries are the major importers of Kenyan tea.
Erratic rains and a weakening Kenya shilling resulted in a decline of coffee output, the firm said. This weighed down gains from improved prices caused by a dry spell in Brazil, the world’s leading coffee producer that continues to cut global supply.
The company's gross revenues shrank to Sh1.37 billion from Sh1.47 billion made in the previous year.
Sasini projects to incur further costs in power, agricultural inputs and labour.
The company did not declare an interim dividend.
The tea and coffee producer’s stock traded at Sh15.55 at 2.30pm Friday down from Thursday’s closing price of Sh16.65.
