Kakuzi Gives Profit Warning Following Drop in Avocado Production

Kakuzi has issued a profit warning anticipating at least 25% drop in net profits for year ended 31 December 2021.

Agricultural firm, Kakuzi Plc says a drop in avocado production and price volatility in its key export markets will hit its profit for the year ended 31 December 2021.

The firm’s profit before tax for the half-year period ending June 2021 was KSh 276.7 million compared to KSh 204.1 million posted within the same period last year. 

The anticipated drop in full-year earnings is principal as a result of: One, the 2021 Hass production which the firm says was  18 per cent lower than 2020.

“The harvesting of our flagship products, avocado and macadamia, began in earnest in June. The preliminary production data available at this stage indicates that the avocado crop output to market is significantly lower than 2020, whilst the macadamia crop is in line with earlier projections,” Ng’ang’a said during the H1 results.

Two, lower global market prices in our European markets due to an oversupply of fruit from Peru and Columbia which impacted prices during the same period that our fruit was also in the market.

“However, our other crops have performed as expected with an increasingly strong performance from the macadamia business, which validates the investments made into diversification over the years,” Kakuzi Board chair Nicholas Ng’ang’a.

“Continuing this product diversification strategy is of critical importance. This strategy aims to mitigate the global market volatility and overreliance on any one product.”

Kakuzi Plc is a dually listed company trading on both the Nairobi and the London Stock Exchange. 

It engages in the cultivation, manufacture, and marketing of tea, growing, and marketing of avocados, livestock farming, growing of macadamia and forestry development.

Kakuzi is the 48th most traded stock on the Nairobi Securities Exchange between Oct 5, 2021, and  Jan 5, 2022.  Kakuzi has traded a total volume of 62,600 shares—in 13 deals—valued at Ksh 24.1 million over the period, with an average of 994 traded shares per session.

The current share price of Kakuzi Limited (KUKZ) is KSh420.00. 

According to its 2020 Environmental, Social, and Governance (ESG) report, over the last four years, it has paid out over Ksh. 900 million in dividends to its 1,300 shareholders and Ksh. 260 million to smallholder avocado farmers. 

Kakuzi Remains Bullish; Income Diversification Strategy Yielding Fruits