Sasini raises profit outlook on strong dollar, tea price spikes


Some of the coffee and tea brands marketed by Sasini Ltd. FILE PHOTO | ANTHONY KAMAU | NMG

Agricultural firm Sasini has said it sees a boost in its full-year core sales and earnings, encouraged by higher global coffee and tea prices on tightening of supplies from key producer markets like Brazil and Vietnam.

Sasini chief executive Martin Ochien’g speaking on Tuesday at a virtual investor briefing said the weakened shilling also spells better times for its exports.

“We had an extremely strong first six months. It is our intention to continue this strong performance into the second half,” Mr Ochien’g said.

Sasini more than tripled its net profit in the half-year ended March, helped by higher sales and lower costs.

The Nairobi Securities Exchange-listed firm made a net profit of Sh421.3 million in the review period compared to Sh122.2 million the year before.

Sasini’s sales grew 65.3 percent to Sh3.3 billion, driven by higher prices of tea and coffee that also reflected the impact of the weakening of the Kenya shilling. The firm also benefited from higher gross margins, which nearly doubled to 16.3 percent on the back of lower operating expenses.

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“Coffee prices have been very good. We’ve averaged as a business $7 a kilo and as an industry in some cases $7.5 a kilo and that is really good for Kenya even though coffee production has really gone down,” said Mr Ochien’g.

“One of the things we’ve done this year as a country is to take advantage of reduced supply from the key coffee-producing nations in the world of Brazil and Vietnam that are coming off the effects of both the pandemic and weather. We expect that situation to last another 18 to 24 months. We expect those prices to continue to stay strong.”

Mr Ochien’g said the weak shilling has also come as a boon for Kenyan exporters.

“We are seeing a weaker shilling and that means for us who are principally exporters we are benefiting from the proceeds that we get mainly in forex when we convert that into Kenya shillings for our own use,” he said.

Sasini directors recommended the payment of an interim dividend of Sh1 per share compared to Sh0.5 per share a year earlier. The doubling of the payout reflects Sasini’s growing cash reserves.

The firm has been looking to expand to markets in Asia, North America and the Middle East beyond its current Europe stronghold to boost sales of products such as tea, coffee, macadamia and avocados, citing a huge opportunity as the global markets fully reopen following the Covid-19 pandemic disruption.

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Europe remains a key market for Sasini and its rival food producers but they are recently eyeing new markets outside of the continent on the back of high demand elsewhere.

Avocados and macadamia nuts are low in calories but rich in nutrients, and demand for the two products in Europe, China and the United States has increased in recent years.

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