Listed agricultural firm Limuru Tea #ticker:LIMT sunk into Sh18.15 million loss in the first six months of 2019, being seven times more the loss posted in a similar period last year, due to falling prices of green leaf.
In the half year ended June, sales revenue fell by more than a third to Sh29.35 million from Sh42.75 million in a similar previous period, putting pressure on the bottom-line.
“This decrease in the first half of 2019 is due to deepening market prices experienced in 2019,” Chairman Richard Korir said in a comment on the performance.
During this period, the company produced 1,138 metric tonnes of green leaf, which yielded 267 tonnes of made black tea.
This was a five percent increase in tea volumes compared to the first half of last year. However, the declining tea prices meant that the firm could not fetch higher revenues on this increased output.
Tea prices started dropping from the first quarter of the year and Mr Korir warns that depressed market prices continue to pose a risk to the business performance.
Other tea firms have also taken a hit with Eaagads Tea issuing profit warning for the full year performance ended March.
Sasini Tea sunk into Sh194.6 million loss for the half-year ended March, down from Sh84.6 million profit in a similar period last year.
Kenyan tea prices have slumped to their lowest level in at least five years due to a glut and weak demand in the main export markets, according to the East African Tea Trade Association (EATTA).
The EATTA, which represents growers, buyers, brokers and tea packers, recently told Reuters that tea prices at the Mombasa auction had slumped to Sh185.49 per kilogramme compared to last year’s average price of Sh265.87. The price of tea started at Sh215 a kilo in the first sale of 2019
Kenya is the leading exporter of black tea in the world and the crop is also one of its top foreign exchange earners, along with tourism, flower exports and diaspora remittances.