Listed agricultural firm Kakuzi Plc has issued a profit warning for the year ending December 31, 2024, citing lower turnover from avocado exports as well as supply chain disruptions due to prevailing tensions in the Middle East.
The firm expects its net earnings for the year to drop by at least 25 percent, meaning it will not surpass three-quarters of the Sh453.5 million net profit reported by the firm during the year to December 2023.
“This profit warning notice arises from trading information, market forecasts and the unaudited results to October 31, 2024, among other data sources currently at the Board’s disposal,” reads a notice signed by board chairman Nicholas Ng’ang’a.
“The anticipated drop in full-year earnings is mainly a result of lower turnover from avocado exports arising from lower crop and supply chain disruptions due to the prevailing Middle East geopolitical tensions.”
Kakuzi says the Red Sea route to its main European markets has been closed, forcing it to resort to long journey paths around the Cape which has given rise to significant quantities of spoiled fruit with low market returns.
“In a positive light, our macadamia business has recovered well in the year, our order books are full, and the price level is almost double this time last year. However, this cannot fully compensate for the losses of extended shipping times on avocados,” said the firm.
The profit warning comes despite Kakuzi nearly tripling its earnings for the half-year to June 2024 to Sh347.5 million, compared to the Sh117.5 million fetched during a similar period last year.
Last year, the agricultural firm retained a Sh24 per share dividend despite a 46 percent dip in net profit.
Kakuzi’s announcement comes just days after listed marketing and communications firm WPP Scangroup issued a similar notice warning of an at least 25 percent drop in profit for the year ending December this year, on the back of foreign exchange losses driven by the appreciation of the local currency.
"Based on the preliminary assessment of its projected consolidated financial results for the financial year ending December 31, 2024, net consolidated earnings for the Company and its subsidiaries (the “Group”) will be at least 25 percent lower than that reported in the financial year ended December 31, 2023,” said Scangroup.
“The financial results for the financial year 2024 are negatively impacted by foreign exchange losses driven by the significant appreciation of the Kenyan Shilling versus the reported gains in 2023.”
During the year ended last December 2023, the marketing agency posted a Sh130.1 million profit, recovering from a Sh145.5 million net loss in 2022.