Food and vegetable processing company, Kenya Orchards Limited #ticker:ORCH , has issued a profit warning for this year owing to declined demand of their products exacerbated by the pandemic.
The manufacturer is expecting a drop in profit of more than Sh2 million in the year ending December.
The firm listed on the Nairobi Securities Exchange made a net profit of Sh8.43 million the previous year.
This means that it expects maximum net earnings of Sh6.3 million in the current financial year. The firm, which engages in processing and selling of food, fruit and vegetables, has faced increased competition besides weak consumer demand in a slowing economy.
“The board wishes to announce that based on the projections of the reminder of the year, the net profit for the 2020 financial year is expected to be lower by more than 25 percent of the net profit reported for the same period in 2019,” the firm’s chairman T.K Patel said in a notice.
Mr Patel said the expected drop in revenues is from the dampened demand on spillover effects of the pandemic that saw companies lay off staff and cut their salaries.
“The company has continued on a growing path, however we have experienced negative effect due to Covid-19 which have impacted overall profitability. Most of our customers have been affected negatively by Covid-19 and therefore overall business is down,” he added.
Kenya Orchards is among the growing number of companies whose earnings have been hurt this year due to the economic fallout brought by the pandemic.