KENYA – Kenyan fresh food producer and exporter Kakuzi Plc, has reported a 48.6% decline in net profit to Ksh319.7 million (US$2.79m) in the financial year ended December 2021, compared to Ksh622 million in the preceding year (US$5.43m).
The dip in the grower’s profitability is attributable to an 8.4 per cent slide in sales to Ksh.3.3 billion (US$28.8m) from Ksh.3.6 billion (US$31.41m) due to low avocado production and prices.
This according to local news outlets, sent its earnings to levels last seen in 2014 when profit was Ksh160.2 million (US$1.4m).
“The year saw the group post reduced earnings due to lower avocado production and prices. This was due to the avocado orchards entering their bi-annual offseason bearing cycle which results in a large crop of avocados in one year, followed by a small crop the following year,” Chairman of the Board Nicholas Ng’ang’a said.
The lower avocado sales were nevertheless offset by greater earnings from macadamia sales on increasing yields.
“We, however, experienced greater earnings from macadamia sales during the year as a result of increased yields from our young orchards,” Ng’ang’a notes.
Despite the drop in profit, the board has recommended an increase in the dividend per share to Sh22.00 compared to Sh8 per share in 2020 translating to a payout of Ksh431.2 million (US$3.76m) up from Ksh352.8 million (US$3.08m).
Paying dividends above the net profit will see the firm tap into retained earnings for Ksh111 million (US$970,000) and cut the reserves from Sh5.08 billion to Ksh4.97 billion (us$41.8m).
Kakuzi expects product diversification to remain key to its future earnings growth.
The board also tasked the management team to accelerate the execution of a product and markets diversification strategy, including enhanced domestic sales.
The strategy is aimed at mitigating the global market volatility and over reliance on the flagship export product.
However, the company is set to up its earnings after bagging the lucrative Chinese fresh avocado market with an annual avocado demand of around 43,860 metric tonnes, valued at about US$130 million.
This comes after the company got a go ahead from the Kenya Plant Health Inspectorate Service (KEPHIS), to process and prepare export-grade fresh avocados for the Asian market.
The KEPHIS approval follows a stringent phytosanitary audit was performed on its extensive Kakuzi farms and packhouse.
The green light was a testament to the company’s commitment to ensuring production of safe and quality products.
In the last one year, Kakuzi has invested more than Kshs 200 million (US$1.75m) to guarantee quality production and environmental management practices that align with both local and globally recognized standards.