Companies

Kakuzi net profit grows 269pc to Sh270m on firm tea, avocado prices

tea

A tea farm. Kakuzi has posted a 269.45 per cent growth in after-tax profit to hit Sh270.4 million for six months ended June 2018. FILE PHOTO | NMG

Agricultural firm Kakuzi #ticker:KUKZ has posted a 269.45 per cent growth in after-tax profit to hit Sh270.4 million for six months ended June 2018.

The firm posted Sh73.2 million profit for the same period in 2017.

The Nairobi Securities Exchange (NSE)-listed firm #ticker:NSE has attributed this to improved tea profits due to higher volumes and firm prices in the first quarter.

Also, avocado results significantly improved on the last year’s performance due to increased volumes and a strong winter market in Europe, as well as macadamia and forestry earnings.

However, the board has not recommended the payment of an interim dividend.

“Given the volatility that has now crept into the market, the trading picture for the second half of the year is very difficult to predict, particularly as this is the time when the vast majority of the avocado crop is sold,” Kakuzi said in its half year results for the period ended June 30 report.

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Dry weather

Kakuzi said dry weather conditions were experienced during the first two months of the year but thereafter well above average rainfall has been received to the benefit of Kakuzi’s avocado and macadamia production.

In addition, international market prices for these two commodities remained firm till early June when there was a precipitous fall in prices in the European avocado market.

Kakuzi said this came about through unprecedented volumes being delivered from Peru and South Africa, both of which are experiencing a high production year.

“At this point, given the above, it is extremely difficult to predict the year’s performance as Kakuzi is just entering its main harvest and principal sales’ season for its avocado crop.

Firm market

On a positive note, the macadamia market has remained firm to the half-year point,” said Kakuzi chairman Graham Mclean.

Kakuzi said tea volumes have also benefited from extended wet weather conditions and yields are 17 per cent up on last year thus far.

The prices of tea were buoyant at the start of the year but have been steadily declining since, as national production and auction volumes have risen significantly.