KENYA – Limuru Tea Company has issued a profit warning for the financial year ended December 31, 2023, anticipating a more than 25 percent drop in profit attributed to increased operational costs.

Limuru Tea PLC, formerly Limuru Tea Company Limited is an outgrower to Unilever Tea Kenya Limited (UTKL), the largest private sector tea company in Kenya.

The company joins 13 other companies that have issued profit warnings to investors since last year, citing higher costs and a valuation decline on assets.

It attributes losses to the high cost of importing fertilizers, the depreciation of the Kenyan shilling, and a projected loss in biological asset valuation last year.

“The Board of Directors of Limuru Tea Plc hereby informs holders of securities issued by the company and the general public that based on a preliminary review of the financial statements, the company is expected to record a decline of more than 25 percent in profit before tax for the financial year ending 31st December 2023,” read a statement by the company’s Chairperson, Dorcas Muli.

Other companies that have issued profit warnings profits before include Unga Group, Sanlam Kenya, Express Kenya, Sameer Africa, WPP Scangroup, Crown Paints, Car & General and Nation Media Group.

The rising importation cost of fertilizers has also contributed to the financial challenges faced by Limuru Tea. The company points out that the adverse impact on fertilizer costs is a result of the depreciation of the Kenyan shilling against the US Dollar.

Additionally, a projected loss in biological asset valuation for the year 2023 has further influenced the expected dip in profits. The firm now anticipates a profit of no more than Kes8.5 million (US$ 53,793) for the year ended December 2023.

In the fiscal year ending December 2022, Limuru Tea posted a profit after tax of Kes11.345 million (US$ 71,798).

In Kenya, companies are required by law to issue profit warnings at least 24 hours before they publish full-year results which show that their earnings have dropped by a quarter or more compared to the prior year.

On November 2023, the Tea Board of Kenya revealed plans to conduct a special audit on the entire tea value chain following growing concerns over the high production costs and its impact on farmer incomes.

The audit was to establish the cost parameters along the value chain including farms, manufacturing, and trade. 

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