Nairobi — Agricultural firm, Limuru tea 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 on Saturday, the Nairobi Securities Exchange listed firm 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," the firm said through a notice.
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.
According to the Q3 2021 Balance of Payments report prepared by KNBS, 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.
Kakuzi has similarly 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 company has attributed the poor performance to a drop in avocado production and lower global market prices in European markets.
