Agricultural firms Williamson Tea Kenya and its affiliate Kapchorua Tea recorded improved results for the half year ended September, riding on lower operating expenses even as management said the outlook remains uncertain due to weak demand.
Williamson narrowed its half-year loss to Sh10 million compared to a Sh122 million loss posted a year earlier. Meanwhile, Kapchorua's profit grew more than fivefold to Sh95.1 million from Sh18.2 million in a similar period last year.
The revenues of Williamson declined 14.7 percent to Sh1.68 billion from Sh1.98 billion but its operational losses shrunk 48.6 percent to Sh111.5 million signaling a sharp fall in its operation expenses. Kapchorua’s turnover fell 24.2 percent to Sh829.8 million from Sh1 billion but posted an operational profit of Sh75.1 million.
The management of the agricultural firms were pessimistic of the sector performance citing high supply of Kenyan tea dampening its price.
“Continued efforts to produce high quality tea, cut costs and build Kapchorua's brand have contributed to securing positive results in a difficult market,” said Williamson Tea.
“The outlook for the company remains uncertain with Kenyan tea continuing to outstrip global demand and external costs continuing to rise,” added the company.
The two firms had in June disclosed they were investing in technology in a bid to improve efficiency and reduce their operating expenses.
The firms were also banking on China’s planned removal of trading tariffs with Africa in a new economic pact that would have spurred demand for their produce in the international market.
Williamson booked an income from associated companies of Sh37.6 million up from Sh7.2 million a year earlier easing its loss position.
Williamson Tea owns 39.5 percent of Kapchorua Tea. The listed agricultural firms recently capitalised a portion of their reserves by issuing bonus shares to existing shareholders.
Kapchorua’s performance was also boosted by profit arising from changes in valuation of its biological assets which were Sh39.8 million in September up from Sh10.4 million in September 2024.
Williamson issued 17,512,640 new shares of Sh5 each to existing shareholders at a ratio of one such share for each held –doubling its listed shares.
Kapchorua issued 7,824,000 bonus shares at the same rate of one for each currently held.
Notably the share prices of the two firms hit record highs early October as the book closure of the bonus issue neared in mid-October.
The market capitalization of the agricultural firms has spiked with their share prices falling by 18 percent for Williamson Tea and 8 percent for Kapchorua.
Williamson is currently valued at Sh5.9 billion compared to Sh3.61 billion the day before the bonus issue announcement while Kapchorua’s market capitalization is at Sh3.1 billion up from Sh1.7 billion.
The resilience of the share price despite the doubling of shares in supply supported the growth in market capitalization signaling investor confidence in the agricultural firms.
