Kapchorua Tea issues profit warning, earnings down by 25 per cent

Tea plantation (Standard: File)

NAIROBI, KENYA: Kapchorua Tea Kenya PLC has announced that its earnings for the financial year ending March 31, 2019, could be at least 25 per cent lower than those reported during the same period the previous year.

According to the firm’s Chairman Ezekiel Wanjama, the anticipated decline in full year’s profit is attributed to uneven and unprecedented weather patterns, rising labour costs and lower prices fetched during the period.

“With high employee numbers, our anticipated wage and other benefits increases dating back to 2016 require huge financial provisions which if repeated will be unsustainable,” Wanjama said.

Wanjama said The Board of Directors and Management are responding appropriately on cost-cutting wherever possible.

Kapchorua joins other 10 Nairobi Securities Exchange (NSE) listed companies that have issued profit warnings for the year 2018.

The companies are National Bank, Kenya Re, Unga Group, Kenya Power, Crown Paints, UAP, Britam, Sameer Africa, Bamburi Cement, Mumias Sugar, and Sanlam.

National Bank issued a profit warning over the difficulty in recovering bad loans and the cost of restructuring.

“NBK earnings for 2018 will be at least 25 per cent lower due to increased loan impairment charges beyond initial projections due to a revision of the valuation and values recoverable from the non-performing loan portfolio,” said Habil Waswani Company Secretary.

Kenya Reinsurance Corporation (Kenya Re) issued profit warning citing higher claims, forex losses, lower income and impairment of assets.