Kakuzi reports US$1M net loss for FY2024 amid currency fluctuations and geopolitical uncertainty
Despite these setbacks, the Kakuzi Board has recommended a final dividend of Ksh 8 (approximately US$0.06)) per share.
KENYA – Kakuzi Plc, a leading superfoods producer, has reported a net loss of Ksh 131.7 million (US$1.01 million) for the 2024 financial year, a sharp contrast to a profit of Ksh 453.5 million (US$3.49 million) in 2023.
The company cited adverse weather conditions, foreign currency fluctuations, and geopolitical tensions in the Middle East as key factors affecting its performance.
The pre-tax loss for 2024 was Ksh 167 million (US$1.29 million) compared to a pre-tax profit of Ksh 664 million in 2023.
Despite these setbacks, the Kakuzi Board has recommended a final dividend of Ksh 8 (US$0.06) per share.
Kakuzi’s flagship avocado exports faced significant setbacks due to the closure of traditional Red Sea shipping routes.
Managing Director Chris Flowers explained that the only available shipping route—around the Cape of Good Hope in South Africa—adds two weeks to delivery times, affecting fruit quality upon arrival in Europe.
“The results reflect a number of challenges, including the excessive rainfall experienced in early 2024, which caused waterlogging, hampering fruit production. Consequently, fruit volumes for both Hass and Pinkerton avocados decreased by 23% and 19%, respectively,” said Flowers.
The company’s avocado profits declined to Ksh 361 million (US$2.79 million), a sharp drop from Ksh 1.37 billion (US$10.59 million) in the previous year. Total avocado exports fell from 3,074,105 cartons in 2023 to 2,222,244 cartons in 2024.
Currency fluctuations add to challenges
Kakuzi also suffered foreign exchange losses due to the strengthening of the Kenya Shilling. The company recorded a foreign exchange loss of Ksh 197 million (US$1.52 million) in 2024, compared to a gain of Ksh 118 million (US$0.91 million) in 2023.
The appreciation of the Shilling against the Euro—averaging Ksh 140 (US$1.08) during the avocado export season—led to reduced earnings in local currency.
Despite avocado losses, Kakuzi’s macadamia division recorded a pre-tax profit of Ksh 69 million (US$0.53 million), reversing a Ksh 354 million (US$2.72 million) loss from the previous year.
The forestry and livestock units also posted positive results, with forestry profits rising from Ksh 149 million (US$1.15 million) to Ksh 288 million (US$2.22 million), while livestock operations recovered from a Ksh 13 million (US$100,100) loss in 2023 to a Ksh 31 million (US$0.24 million) profit.
Expanding market reach
Kakuzi PLC Chairman Nicholas Ng’ang’a emphasized the need to reduce reliance on European markets. He noted that while China and India offer potential, their demand remains lower compared to Europe’s.
“In 2024, the USA consumed 1.3 million metric tonnes of avocados, compared to 0.9 million metric tonnes in Europe, with over 80% of its avocados sourced from Mexico. The North American market presents a significant opportunity for Kenya,” Ng’ang’a stated.
Kakuzi is also exploring Agricultural Technology (AgTech) to improve efficiency. Ng’ang’a highlighted the increasing use of Artificial Intelligence (AI) and autonomous agricultural vehicles, such as drones, in global agriculture.
A broader shift in Kenya’s avocado exports
As Kakuzi navigates these disruptions, the broader Kenyan avocado market is also adjusting to shifts caused by Red Sea shipping challenges.
Exporters have noted rising demand for Fuerte avocados in Turkey, while Hass avocados face logistical uncertainties.
Noor Yassin, director of Avochichi, stated, “We’re still at an early stage of the season. The Fuerte avocado campaign started on February 7th, and the Hass avocado campaign on March 17th. However, the two campaigns are in completely different positions.”
According to Yassin, Fuerte avocado shipments to Turkey have increased significantly, with a smooth 30-day transit time and two departures per month. This demand may shorten the season, with expectations for Fuerte shipments to conclude by June.
“For Hass avocados, on the other hand, I think the season will be difficult. Exporters are very cautious with the European market after last season’s heavy losses due to extended delivery times. We’re relying a lot on the Gulf countries,” he added.
As market dynamics evolve, Kenyan exporters are adjusting their strategies to ensure stable trade despite ongoing disruptions.
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