KTDA net profit rises 59pc on higher sales

The Kenya Tea Development Agency (KTDA) Holdings profit rose nearly 59 percent in the year ending June 30, 2018 as it benefited from increase in global commodity prices and higher sales.

Revenues as a result of higher sales rose by 13.4 percent to Sh26 billion even as global prices rose by a lower margin of 0.3 percent or one US cent. This helped push profit after tax to Sh1.84 billion from Sh1.16 billion in the previous year.

The firm, which earns a management fee from managed tea factory companies, currently has eight subsidiaries enabling it to earn from other activities such as value addition and warehousing charges. Chai Trading, for example, specialises in warehousing tea and logistics of the auction and shipping of the commodity while Greenland Fedha gives cheap credit to farmers.

“The Group’s performance has increased significantly in the year. Increase in profit before tax by 58.8 per cent is mainly attributable to good performance across a number of entities in the group such as Chai Trading Company and Greenland Fedha, which saw a significant increase in their profits,” the firm said in its financial report for the year to June 30, 2018.

“There was a slight increase in global tea prices from 3.13 US dollars to 3.14 US dollars. This resulted in an increase in the sales during the year. Increase in Greenleaf harvest resulted to increase in sales volume. For Greenland Fedha, this translated to an increase in uptake of loans as farmers use Greenleaf as collateral for loans and advances,” said the report.

Despite the good performance across the board, the firm faced challenges arising from the general economic slowdown and problems in specific entities with Chai Trading, for example, having to increase provisions for receivables (unpaid debts) amounting to Sh168 million following a cut in sales to Iran that was subjected to sanctions by the US.