Agricultural firm Sasini #ticker:SASN has returned to profitability after sales increased by nearly half, outpacing growth in costs, the publicly-traded firm reported on Thursday.
The company, which largely deals in large-scale tea, coffee, macadamia and avocado farming and production, reported a profit of Sh12.61 million for the year ended September 2020 from a loss of Sh337.74 million a year earlier.
The earnings were largely lifted by a 48.32 percent growth in revenue to Sh4.14 billion, a slightly faster climb than 41.10 percent in direct costs to Sh3.33 billion.
Shareholders, who got a Sh0.50 dividend per share last year despite the firm posting a loss, will, however, miss out this year after the board failed to recommend a payout.
“The benefits of mechanisation (in tea harvesting) coupled with a rigorous focus on cost containment helped us grow our cost of sales slower than our revenue, a desired result that we intend to carry forward with,” Sasini said in a statement signed by chairman James McFie and managing director Martin Ochieng’.
The full rollout of automation in the tea business in the second half of the year which starts from April, the firm said, helped slash administrative costs by 13 per cent.
The sales revenue was boosted by coffee business after the beverage fetched “improved prices despite low production due to weather-related disruptions”, while the avocado unit also posted improved harvest and demand.
Sasini, however, lamented that a drop in tea prices at the Mombasa Tea Auction to less than $2 per kilo watered-down by improved volumes during the year.
The macadamia business, on the other hand, was disrupted since January because of pandemic-related market closures in its major markets abroad.
“We continue to see great results from mechanisation in our tea operations which will bode well for us going forward, and our focus on cost containment remains as strong as ever,” the firm said, adding that it has put in place measures to ensure business continuity amid Covid-19 containment measures.
“We have continued our investments in our new avocado and macadamia business units to help us reduce our reliance on traditional tea and coffee businesses and these are progressing very well.”