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Williamson, Kapchorua predict reduced tea earnings

Williamson, Kapchorua predict reduced tea earnings

Tea pickers. FILE PHOTO | NMG Williamson Tea and Kapchorua Tea have warned of weaker earnings in the future after the two firms posted poor performance for the year ended March 2021 on the back of global oversupply.

The listed tea firms— which cultivate, manufacture and sell tea — said in separate financial performance reports that oversupply of the Kenyan tea coincided with weaker global demand, hurting earnings for the full-year period through March 2021.

“Unless reduced supply or increased demand arrives to rebalance the scales away from buyers’ advantage the coming months will be extremely difficult with record low prices being paid for our category of tea,” Williamson Tea wrote in an outlook note following release of financial performance statement for the year through March 2021.

Willamson Tea sunk into a loss of Sh146.14 million in the review period from Sh137.20 million profit a year earlier, while Kapchorua’s profit slipped 63.65 percent to Sh7.07 million.

“The global Covid -19 pandemic, weakening economies, an over-supply of Kenya tea coinciding with weak demand from certain areas all contributed to a difficult year,” Kapchorua wrote in its financial statement.

Kapchorua, however, said they outperformed market expectations of a loss after penetrating new markets and “outselling competitors”.

Williamson blamed its woes on operating loss which widened to Sh163.2 million from Sh20.65 million, while Kapchorua’s profit were hit by a Sh27.05 million tax charge compared to a Sh8.11 million credit a year earlier.

The firms, which share owners and are publicly-traded on the Nairobi Securities Exchange, said they will dip into retained earnings to pay dividends for the year through March 2021.

Kapchorua directors have proposed to retain a dividend payout of Sh10 per share, while its loss-making peer, Williamson, has recommended the payout be halved to Sh10 per unit.

The beverage traded for Sh181 per kilo on average during last week’s sale at the Mombasa Auction, the lowest in more than five years, according to data kept by the East African Tea Traders Association.

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