Kenya: Kakuzi Issues a Profit Warning On the Back of Lower Avocado Production Last Year

Nairobi — Listed agribusiness firm Kakuzi Plc has issued a procedural profit warning notice with anticipated lower full-year earnings due to lower production and export of avocado fruits.

The notice, which has been issued as per the Capital Markets regulatory requirements, confirms that the firm’s earnings will be at least 25% lower than that reported for the year ended 31st December 2020.

According to Kakuzi Plc Chairman Nicholas Ng’ang’a, the firm’s earnings have been affected by lower yields as the productive avocado orchards had entered their bi-annual production cycle resulting in lower volumes than in 2020. Kakuzi’s order book from the international markets, he disclosed was far in excess of the farm yield volumes.

The firm’s Board, he said, had tasked the management team to accelerate the execution of a product and markets diversification strategy, including enhanced domestic sales. The strategy aims to mitigate the global market volatility and overreliance on the flagship export product.

He added that the lower avocado yields had also suffered from lower market prices in the European key markets due to a significantly higher supply of fruit from Peru and Columbia amidst low consumption trends due to the Covid pandemic.

Kakuzi’s other crops and revenue streams he added had performed as expected with an increasingly strong performance from the Macadamia business, which validates the investments made into diversification over the years.

“As a responsible listed entity, we are taking this early opportunity to issue the profit warning notice, which is also consistent with the half-year earnings statement and commentary issued in August last year,” Ng’ang’a said.