Lower sales, workers' strike hits Limuru Tea earnings

Limuru Tea Plc #ticker:LIMT has sunk deeper in the red on the back of decreased revenue to post an after-tax loss of Sh22.13 million in 2017 from Sh19.07 million the previous year.

The company attributed the performance to a decline in sales volumes.

The Nairobi Securities Exchange (NSE)-listed firm reported a total revenue drop of 23 per cent to Sh80 million in 2017 from Sh104 million in 2016.

This was due to a drop in sales that offset the benefits realised from improved prices in the market and impact of employees industrial action during the year which impacted volumes of the leaf realised.

“The company posted a pre-tax loss of Sh31.6 million in the year ended December 31, 2017 compared to Sh26.7 million pre-tax loss in 2016. The increase in pre-tax loss compared to the prior year was largely attributed to decrease in the turnover as mentioned and inflationary pressures on costs,” said the firm’s chairman Richard Korir said in a regulatory filing Monday.

READ: Relief for tea firms as workers call off strike - VIDEO

The firm’s directors did not recommend the payment of a dividend.

Drought

Last year, the agricultural company produced 2,039,613 kilos of green leaf, a 35 per cent decrease due to prolonged drought in the East of Rift Valley where the firm is located.

This in turn made 469,609 kilos of black tea.

Mr Korir said the firm is optimistic of improved crop yield this year due to increased rainfall that started at the end of last month.

Also, auction prices are steady while the Kenyan Shilling has shown indications of strengthening against the US dollar.

“If the improved weather conditions continue into the second quarter of the year and the market remains steady together with the cost management initiatives the business is undertaking, the full year results are expected to be better than those of the last year,” said Mr Korir.