Eaagads Company Limited has issued a profit warning for the financial year ending 31 March 2020. The company anticipates that its earnings will be lower by at least 25% of last year’s audited earnings.
The profit warning comes at a time where Coffee production is staggering, together with its prices. Meanwhile, Eaagads management is adopting cost-cutting measures to save on production costs.
“Eaagads Limited (the “Company”) hereby announces that the earnings for the financial year ending 31 March 2020 could be lower by at least 25% of the earnings reported in the audited financial statements for the year ended 31 March 2019,” reads a declaration from Eaagads’ Board chairperson Evans Monari.
In the past year, coffee production faced various challenges, such as unpredictable weather arising from global warming. As a result, this climatic factor affected coffee output in Kenya.
Additionally, the high temperature did not favour the flowering of the beverage crop, hence lowering coffee yields.
Falling Prices and High Production costs
Global coffee prices continue to fall. For instance, prices in the New York Coffee Exchange remained low due to oversupply from South American countries like Brazil and Colombia.
At the same time, an increase in labor costs continues to push production costs higher year on year.