Listed agricultural firm Sasini Plc has sank into losses, registering a KSh 562.9 million in loss after tax for the year ended September 2024 compared to a KSh 542.3 million profit in 2023.
- The firm attributed the 203.7% decline to high production costs, depressed commodity prices and supply chain disruptions coupled with the foreign exchange impact.
- Company revenues increased by 20.4% to KSh 6.9 billion from KSh 5.7 billion in the same period in 2023 with earnings grounded by a faster surge in operational costs.
- Sasini saw an increase in the cost of sales by 45.1% to KSh 6.3 billion from KSh 4.4 billion in 2023.
Tea, avocado and macadamia units all exhibited poor performance in the period with only the coffee trading unit recording underwhelming profits.
A persistent glut at the tea auction following the high green leaf production prompted a decline in tea prices which led to high production costs. The high cost of production driven by high input costs of fertilizer, increased cost of power and lower production volumes.
“Due to the Tea glut in the auction, we were unable to get our major private buyers to execute any long-term contracts as prices stayed well below cost of production,” Sasini noted in its full year report, months after issuing a profit warning.
The market was also affected by the minimum reserve prices set in 2022, which were only suspended in October 2024 by the East African Tea Trade association.
The Nairobi Securities Exchange listed firm said it closed several revenue and profit lines in turn increasing the cost of doing business in the coffee value chain as part of business reforms.
Recession, Geopolitics, and the Weather
Effects of the mild recession in major economies, especially in the United States which is a key nut market for Sasini, lowered demand for the nuts business. The overproduction and accumulation of tea stocks in peak seasons led to tea price decline in global markets.
According to the company, adverse weather conditions in the early months of 2024 negatively impacted the production cycles, affecting both crop quality and volumes.
Persistent tensions in the Middle East, which resulted in disruptions to key shipping routes and the Suez Canal, disrupted the shipping times of perishables such as avocados.
Sasini, trading under the ticker symbol SASN at the Nairobi bourse, closed the Friday trading session at KSh 16.05, a 7.0% year to date gain.
Limuru Tea, an agricultural firm also listed at the NSE, joins Sasini in issuing a profit warning, also citing high operational costs and adverse weather conditions.
