Falling coffee prices wipe out Sasini’s profit

By John Oyuke

Sasini Ltd, a Kenyan tea and coffee producer, has announced a 51 per cent drop in net profit for the year ended September 30.

The firm said after tax profit for the period decreased to Sh186.9 million in 2011/2012 from Sh384.7 million previously, mainly due to a substantial drop in prices realised for coffee, compared to the prior year.

Sasini’s Managing Director, Caesar Mwangi also said rising costs of the main inputs particularly energy, farm inputs and labour has also depressed the results.

He cited high input costs of labour and operational inputs such as fertilisers, fuel and electricity, drop in price realisation for coffee and drop in tea production due to drought experienced early this year, as some of the factors that had impacted negatively on the performance.

“The drought experienced during the first three months of this year also resulted in a drop in the production of tea,” he said while announcing the results for the year ended September 30 in Nairobi.

According to the trading results, the year 2011/2012 has seen a decline in financial performance in relation to previous year, despite a four per cent increase in turnover to Sh2.78 billion from Sh2.66 billion in the previous year.

Lower Earnings

The company, one of the country’s leading tea and coffee producers, issued a profit earlier this year warned that earnings for the financial year would be at least 25 per cent lower than what it made last year. It informed shareholders that earnings would reduce mainly due to lower coffee prices, higher input and labour costs.

Mwangi explained that after losses from changes in fair value of biological assets, the loss for the year in review, attributable to owners, was Sh67.8 million compared to prior year’s profit of Sh391.2 million.

 He said the losses from changes in fair value of biological assets were driven mainly by the substantial drop in the realisations of coffee and the increases in the cost of production.

Going forward, the firm plans to pay a final dividend of 25 per cent to bring the total dividend for the year to 75 per cent – Sh0.75 per cent or total of Sh171 million for the year.