By James Anyanzwa
Kakuzi Group, East Africa’s largest producer of Avocado, has issued a profit warning advising that its earnings for 2012 would drop by 25 per cent.
The Kenyan-based agricultural firm, which also produces tea and pineapples, cited the reason for the profit warning to lower prices of its export crops and struggling economies of Europe that have helped strengthen the shilling against the euro, hence affecting returns. It also cited the sale of a subsidiary tea firm, as part of the key drivers of its dismal performance.
The local currency strengthened against the Euro from an average of Sh134 in the second half of 2011, to around Sh108 this year.
During the period under review Kakuzi also made an exceptional release of a provisioning amounting to Sh109 million, as a result of the withdrawal of the Delmonte Kenya Ltd claim made in the financial year 2011 and completed the sale of the subsidiary company, Siret Tea Company Limited, on August 31, resulting in only eight months of trading being consolidated this year.
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“The Group is taking all the necessary measures to maintain the Group’s profitability and positive cash flow for the financial year 2012,” said K W Tarp lee, the Group’s chairman. Kakuzi completed the sale of its subsidiary, Siret Tea Company Ltd (STCL), in August this year.
This is after the Eastern Produce Kenya Outgrowers Empowerment Company Project currently known as Siret Outgrowers Empowerment and Produce Company Limited issued a notice to purchase the remaining 50.5 per cent of the STCL shares.