Kapchorua Tea, one of the major tea companies in Kenya has reported a 64% dip in full year net profit for the year that ended on 31st March 2021. According to its financial statements, the company’s net profit dropped to KSh7.07 million in March this year from KSh19.4 million in March 2020.
An oversupply of tea in Kenya, low demand, and weak economic activity throughout the world are some of the factors that led to the drastic fall in the company’s annual profit. Despite the tough year, Kapchorua outperformed market expectations and expanded its list of buyers.
The firm’s revenue improved to KSh1.44 billion, a 27% increase from KSh1.13 billion reported in the previous year. Kapchorua Tea reported an increase in the fair value of biological assets, including tea leaves and tea bushes, of KSh21.03 million.
In the past financial year, total assets held by the tea company increased by 7% to KSh2.08 billion, from KSh1.94 billion in March last year. Similarly, total liabilities grew to KSh595 million from KSh515 million a year ago.
According to its financial report, Kapchorua has a bleak outlook about the future. “The future looks very difficult, with major buyers in and out of the market and with availability of tea remaining very high, quantities may be purchased at leisure,” said the company.
Directors of Kapchorua Tea recommend a first and final dividend of KSh10 per ordinary share for the period that ended on 31st March 2021, subject to shareholders’ approval. The dividends will be paid out to investors on the company’s register at the close of business on 21st July 2021.