Limuru Tea Plc has issued its third straight profit warning and fifth in a decade, adding the company to at least 12 NSE-listed companies that have warned of earnings declines over the past 12 months.
- •The company has attributed the outlook to higher labour and operating costs alongside weak tea prices at the Mombasa Tea Auction.
- •Limuru Tea has now issued profit warnings for FY 2023, FY 2024 and FY 2025, following earlier alerts in FY 2021 and FY 2017.
- •Over the past decade, the company has swung between modest profits and losses, posting losses in four of the last eight years and failing to establish a sustained earnings recovery.
Industry data from the Tea Board of Kenya shows the broader pricing environment facing producers. Average national auction prices stood at USD 2.19 per kilo in 2024, equivalent to KSh 295.75, compared with USD 2.15 and KSh 277.82 in 2023.
While average dollar prices edged slightly higher, monthly prices remained volatile, dipping to USD 2.07 in September and staying near USD 2.10 to USD 2.18 for much of the year.
Auction volumes across the country also rose. Total volumes sold increased to 396,370 tonnes in 2024 from 361,170 tonnes in 2023, while national production climbed to 598,478 tonnes from 499,660 tonnes. Higher supply amid uneven demand has constrained price recovery at the industry level, limiting margin expansion even when output grows.
For smaller producers such as Limuru Tea, operating within this broader market structure, earnings remain highly sensitive to modest price swings and rising wage costs. Limited pricing power means higher input costs feed quickly into the bottom line.
The warning also comes amid a broader wave of profit alerts on the NSE, spanning insurers, banks, investment firms, utilities, airlines, and agricultural exporters. As one-off gains fade and costs remain elevated, investor focus is shifting toward balance sheet resilience and the ability of smaller producers to stabilise earnings through the cycle.
