NAIROBI, Kenya, Jan 18 -Agricultural firm Limuru Tea expects its net profit for 2021 to decline by at least 25 percent, citing lower green leaf volumes compared to 2020.
In a notice to shareholders on Saturday, the Nairobi Securities Exchange-listed firm said business was weighed down by low tea prices and rising cost of production amid Covid-19 economic disruptions.
“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,” the firm said through a notice.
The listed firm’s pre-tax loss was Sh8.4 million during the first six months of 2021 compared to a loss before tax of Sh11.4 million over the same period in 2020, improvement directors of the firm attribute to cost efficiencies undertaken by the business.
”Whilst the low tea market prices remain a concern, the management will keep undertaking strategic initiatives of cost efficiencies and quality improvement to ensure maximum returns,” Limuru Tea board chair Richard Korir said while releasing the firm’s half-year results in August 2021.
Data by the Kenya National Bureau of Statistics (KNBS) reveals that tea has continued to perform dismally in the international market with earnings of the commodity dropping by 9.1 percent in the third quarter of 2021 compared to a similar period in 2020.
According to the Q3 2021 Balance of Payments report earnings from the export of tea deteriorated from Sh30.5 billion in the third quarter of 2020 to Sh27.7 billion in the review period.
“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,” said KNBS.
Last week, Kakuzi issued a profit warning anticipating at least a 25 percent drop in net profits for the year ended 31 December 2021.
The Nairobi Securities Exchange-listed firm attributed the poor performance to a drop in avocado production and lower global market prices in European markets.