Limuru tea, a listed company on the Nairobi Securities Exchange has projected a 25 percent decline in its net profits for the year ended 31 December 2021 attributed to lower green leaf volumes compared to 2020.
In a notice to shareholders, Limuru Tea attributed the declined profits to rising cost of production amid Covid-19 economic disruption.
“The company is expected to record a decline of more than 25 percent in the net profits. The board is of the view that the estimated decrease in profits is mainly due to the lower green leaf volumes that were realized in 2021 compared to 2020,” Limuru Tea in the notice.
The board attributed the sharp decline to the lower green leaf volumes that were realised in 2021 compared the prices posted in the previous year.
Tea has continued to perform dismally in the international market with the earnings of the commodity dropping by 9.1 per cent in the third quarter of 2021 compared to a similar period in 2020, Kenya Nation Bureau of Statistics (KNBS) data shows.
Data on the Balance of payment report by KNBS shows that earnings from the export of tea deteriorated from ksh 30.5 billion in the Q3 2020 to Ksh 27.7 billion in the same period in 2021.
“The decline was largely attributable to the decline in the export quantities that fell from 138.6 thousand metric tonnes to 124.5 thousand metric tonnes,” KNBS in their Q3 report.
Limuru Tea Plc owns 275 hectares of tea plantations situated four kilometres to the east of Limuru Town. The Company is an outgrower to Unilever Tea Kenya Limited (UTKL), the largest private sector tea company in Kenya. UTKL acts as the Limuru Tea Company’s managing agent in the growing, manufacturing, sales and marketing of its tea.
This brings the total number of listed firms that have issued a profit warning for the financial year 2021 to 2. Last week, kakuzi Limited announced their profit warning to shareholders saying that its net earnings for the year ended 31st December 2021 will potentially be at least 25% lower than that reported for the year ended 31st December 2020.
Kakuzi attributed the performance to an 18% drop in production of Hass Avocado. Additionally, there was also lower global market prices in Hass avocado in its European markets due to an oversupply of the fruit from Peru and Columbia, which impacted prices during the same period that the Kakuzi product was also in the market.
Read also; Limuru Tea is Top Price Gainer at NSE.
