Kakuzi stock plunges 37pc despite record earnings


The entrance to the Kakuzi factory in Makuyu, Muranga County. FILE PHOTO | NMG

Kakuzi’s share price plunged 37.5 percent on Wednesday when it announced record earnings and dividends, setting the agricultural counter on a long path to recovery.

Market data shows that 2,000 shares were traded on that day, valuing the transaction at Sh480,000.

Trading rules allow share prices to drop or rise by a large margin on the day when a material announcement –such as financial results— is made.

Kakuzi’s shares trade infrequently and can force a seller to quote lower prices to get a buyer.

The Wednesday trade means it will take a long time for Kakuzi’s stock to recover since daily price movement caps of 10 percent now apply.

The stock had previously traded at Sh384 on Friday last week. The latest transaction sent the share price to a new 52-week low and places its 12-month decline at 43.5 percent.

The firm’s share price had hit highs of Sh450 over the same period.

The Wednesday plunge came despite the company declaring a record dividend of Sh24 per share or a total of Sh470.3 million for the year ended December.

The new payout marks a nine percent increase from the Sh22 per share amounting to Sh431.1 million which was paid for the prior year.

The agricultural firm’s net income more than doubled to Sh845.8 million in the year ended December, up from Sh319.7 million a year earlier.

Sales increased 34.5 percent to Sh4.4 billion which the company attributed to higher production and exports of its key products led by avocados.

Production of Hass and Pinkerton avocados increased and there was also a higher contribution from both macadamia and tea operations, Kakuzi said.

The firm says it plans to grow avocado exports to the Chinese market which has the potential to become one of the largest destinations for Kenyan fruit.

Kakuzi’s performance is an indication that other agricultural firms could also post higher earnings for their respective financial years.

Besides rising demand for commodities on recovery from the pandemic, producers are also benefitting from the weakening shilling against major world currencies such as the US dollar.

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