Limuru Tea Company Ltd, one of Kenya’s agricultural firms engaged in the growing of green leaf tea has warned of weaker earnings for the fiscal year ended 31 December 2021.
Similar to the previous fiscal year, the firm attributes this to lower green leaf volumes and the rising cost of production.
“The company is expected to record a decline of more than 25 per cent in the net profits. The board is of the view that the estimated decrease in profits is mainly due to the lower green leaf volumes that were realized in 2021 compared to 2020,” the listed firm said in a notice Saturday.
In 2020, its revenues increased by 6 per cent to Ksh 97 million in the fiscal year from Ksh 91 million in 2019 driven by higher sales volume from increased production.
During the year, it produced 3, 882, 430 kilograms of Greenleaf compared to 3,201,030 the previous year which in turn was manufactured into 844, 103 kilograms of black tea compared to 719, 409 previous year.
From its 2020 Annual Report, the company has been executing a program to replace old low yielding tea bushes with new clonal varieties which are high yielding and drought tolerant.
“So far, a total of 46 ha has been replanted and a further 7ha arising from consolidation. This is being followed up with the intensive infilling program in older fields to improve crop cover and is expected to boost productivity and increase the volumes of green leaf tea produced by the company in the long run.”
The current share price of Limuru Tea Company Limited (LIMT) on the Nairobi Securities Exchange (NSE) is Ksh 320.00. It closed its last trading day (Friday, December 24, 2021) at Ksh 320.00per share, a 4.5 per cent drop from Thursday’s closing price of Ksh335.00.
Kenyan tea has performed poorly in the international market with earnings dropping by 9.1 per cent in the third quarter of 2021 compared to a similar period in 2020, Kenya Nation Bureau of Statistics (KNBS) data shows.
In the Q3 2021 Balance of Payments KNBS report, earnings from the export of tea dropped from KSh30.5 billion in the third quarter of 2020 to KSh27.7 billion in the review period.
“The decline was largely attributable to the decline in the export quantities that fell from 138.6 thousand metric tonnes to 124.5 thousand metric tonnes,” said KNBS.