Kakuzi Plc, a Kenyan agricultural listed at both the Nairobi Securities Exchange(NSE) and the London Stock Exchange, has reported a 13% decline in net profit to KSh 622 Million at the close of the period ended 31st December 2020.
This is compared to a net profit of KSh 713.4 the previous year.
“The pandemic created significant disruption in our main European markets with the almost complete closure of the Food Service sector. Despite this, demand for avocados remained resilient through the retail sector and was able to absorb the very high volumes which arrived in Europe from all origins, albeit at reduced price levels,” said Nicholas Ng’ang’a, Chairman of Kakuzi’s Board of Directors.
On the back of exceptionally high rainfall, Ng’ang’a said the firm’s avocado export volumes were 27% up in 2019.
Cold chain logistics also operated well during the season despite the enormous challenges that the pandemic posed.
Kakuzi hit by COVID-19 pandemic effects
The firm, which is engaged in the cultivation, processing and marketing of avocados, blueberries, macadamia, tea, livestock and commercial forestry, saw its pre-tax profit decline to KSh 847.5 Million in 2020 from the previous KSh 1,014 Million in 2019.
The listed firm achieved robust results for the year, despite the uncertainty in its main sales markets caused by the COVID-19 Pandemic.
Nicholas Ng’ang’a, Chairman of Kakuzi’s Board of Directors, said that while avocado and macadamia export volumes were higher in 2020, these were not sufficient to mitigate a significant reduction of 34% in the price of avocados,” said
Nicholas Ng’ang’a was appointed Chairman of the Board on November 1st, 2020, taking over from Graham Mclean, who stepped down from this position after four years. Mclean continues to sit on the firm’s Board as a non-executive Director.
In its overview, Kakuzi said that while market prices in 2019 were at record levels, 2020’s prices remained average.
The firm said improved macadamia and sales of wood products shows a successful diversification strategy that is finally paying off.
Tea production in Kenya stood at 569 Million kg in 2020 against
458 Million kilograms in 2019. But declining prices has affected the profitability of this crop in 2020.
Ng’ang’a added that Kakuzi’s financial performance has also been impacted by the cost of the Company defending itself from a UK law firm that wished to bring Kakuzi into the jurisdiction of the United Kingdom. Kakuzi was, however, dropped as a party to the UK proceedings in July 2020.
As part of its empowerment plan, Kakuzi paid KSh 58 Million to the smallholder fruit farmers in December 2020.
Kakuzi has already issued a notice to shareholders concerning its 93rd Annual General Meeting(AGM) to be held via electronic means on Tuesday, 18th May 2021, at noon.
Shareholders are expected to, among other agenda items, approve payment of the first and final dividend of KSh 18.00 per share for the financial year ended 31st December 2020. This is compared to KSh 14 per share paid out in 2019.
The meeting will also re-elect directors, including Nicholas Ng’ang’a, Andrew Ndegwa Njoroge and John K. Kimani.