KENYA – Eaagads Limited, a bulk coffee producing company in Kenya, has reported growth in revenue by 114.6 percent to Sh179.6 million (US$1.72m) driven by 172% increase in volumes for the year ended March 2019.
This has seen the company return to profitability after posting a net profit of Sh2.65 million (US$0.025m) from a Sh62.5 million (US$0.6m) loss and Sh83.7 million (US$0.8m) in revenues in the year ending March 2018.
The Nairobi Stock Exchange-listed company produced 419 tonnes of coffee last year, up from 154 tonnes in the 2017/18 and sold 416 tonnes compared to 252 tonnes in the previous period.
The company said in a statement that “the increase was mainly attributed to favourable weather coupled by good agronomical practices.”
In addition to increased coffee volumes, higher export prices for the commodity improved the company’s performance with the average price realised during the year increasing to US$3.37 (Sh350) per kilogramme from US$3.32 (Sh345) in the prior year.
Last year, the company said that it intended to hand over its business to the Coffee Management Services Limited (CMS), a firm associated with global coffee roaster Dormans with a presence in Kenya, Rwanda, Uganda and Tanzania.
The deal with CMS – which also runs a 3,326-acre coffee farm owned by Tatu City owners, Rendeavour Group – was meant to improve the company’s performance.
Kofinaf holds a 61.74 per cent shareholding Eaagads.
Coffee prices at the Nairobi Coffee Exchange (NCE) rebounded in the first sale after an annual recession, with the rise attributed to improved rates in the global market.
The coffee auction says the good prices should be sustained if the global prices maintain the current level and if the auction gets good crop.
According to a Business Daily report, Kenya sells more than 95 percent of its coffee to the international market, which determines the value of the beans locally.
Low-quality coffee coupled with depressed international prices pushed down the value at the auction in the last three months.
In addition, earnings from the commodity dropped to US$97.86 million (Sh10.2 billion) in 2018/2019 crop year ending June 2019 from US$122.81 million (Sh12.8 billion) in 2018 as low prices impacted income.