Companies

Sasini posts Sh122m net profit after cutting costs

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Women pick tea leaves at a farm. FILE PHOTO | NMG

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Summary

  • Agricultural firm Sasini made a Sh122.2 million net profit in the six months ended March, benefiting from deep cost cuts.
  • The performance saw the Nairobi Securities Exchange-listed firm reverse a net loss of Sh13 million recorded a year earlier.
  • The company declared an interim dividend of Sh0.5 per share to be distributed on July 15 to shareholders who will be on the register as of June 2.

Agricultural firm Sasini made a Sh122.2 million net profit in the six months ended March, benefiting from deep cost cuts.

The performance saw the Nairobi Securities Exchange-listed firm reverse a net loss of Sh13 million recorded a year earlier.

The company declared an interim dividend of Sh0.5 per share to be distributed on July 15 to shareholders who will be on the register as of June 2.

Sasini’s sales dropped 2.2 percent to Sh2.02 billion from Sh2.07 billion, underlining the role of lower costs in boosting the bottom-line.

“The impact of mechanisation of tea harvesting continues to be a key driver in the cost containment measures of the company and the return to profitability despite the low tea prices realised during the period,” the company said in a statement.

Sasini did not give a breakdown of its costs but it let go of a large portion of its workforce last year. Its staff count dropped by 1,364 in the year ended September, marking one of the largest job cuts during the Covid-19 pandemic era.

The company ended the period with a total of 2,520 employees across its tea, coffee and other operations.

This was down from 3,884 workers in the prior year, according to disclosures in the firm’s latest annual report.

It was not immediately clear how many of the employees were on short-term contracts and how much the firm spent in retrenchment costs.

The downsizing came despite improved sales and profitability, indicating that the company has taken a proactive step to cut costs in anticipation of weaker earnings growth as the pandemic lingers on.

Most of the job cuts were witnessed at the tea estates where the number of staff declined by 930 to close at 1,683.

Other operations of the company saw the head count fall by 258 to 80 while the workforce at the coffee division shrank by 176 to 757.

Sasini says the pandemic hurt some of its operations, adding that it is keen on cutting costs going forward. “In our tea business, we will entrench our automation project to help deliver profits derived from reduced costs of production,” the firm’s chairman James McFie says in the report.