The coffee-growing listed firm EAAGADS has posted a net loss of KSh 70 million for the year that ended on 31 March 2020 from KSh 2.647 million net profit recorded on 31 March 2019.
EAAGADS says that coffee production fell to 114 tons from 419 tons produced last year. The decrease was mainly attributed to the severe drought experienced in the first half of the year which affected formation of the late crop for the production year 2019/2020.
Due to the low yield, the company only achieved sales of 127 tons of coffee compared with 416 tons last year. In the year under review, revenues fell to KSh48.622 million compared to KSh179.615 million recorded the previous year. This was despite an increase in the average price realized during the year 2020 to $3.75 per kilogram from $3.37 per kilogram in the previous year.
However, the cost of production fell by KSh59 million to KSh76.363 million from the KSh136.318 million recorded in the year ending March 2019. Production costs include coffee upkeep costs, picking costs, wet processing costs, and crop commission charges.
Farm management fees remained at $7.5 per hectare as the farm remains under the management of Coffee Management Services (CMS). The coffee firm says that production costs were directly correlated to production levels.
Total assets grew from KSh 942 million in March 2019 to KSh 949 million in March 2020. The company also revalued its freehold land and this resulted in a revaluation surplus of KSh 51.6 million, net of tax.
The firm did not recommend payment of a dividend for the year that ended on 31 March 2020.
Outlook
The coffee producer has cut its crop expectation for 2020 to an estimated 235 tons from an initial expectation of 330 tons. EAAGADS attributes the lower harvest outlook to high rainfall from January to April 2020 that resulted in the intermittent flowering of the late crop.
In addition, the firm forecasts low prices as international coffee prices have reached unprecedented low levels. Currently, the New York benchmark price is under 100 US-cents per pound which is the lowest in more than a decade.
EAAGADS was incorporated in 1946. It is listed on the Nairobi Securities Exchange (NSE). The company is involved in the growing, blending, and selling of coffee products locally and internationally. The firm is controlled by Kofinaf Company Limited, which holds 61.74% of the share capital of the company.
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