Kenyan agricultural producer Kakuzi Ltd’s pretax profit for last year fell 0.9 per cent to Sh554 million after a poor avocado harvest, the company has said.
Kakuzi, which also grows tea and pineapples as well as rearing livestock, said higher earnings from tea had helped offset lower Avocado prices.
Avocado exports to Europe fetched lower prices after the crop yielded smaller fruit than the previous year due to poor growing conditions, the company said.
"Net returns on the avocado crop, in particular the Fuerte variety, were lower than the previous year. However, profit on the tea operations was ahead of 2009 levels."
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Kenya is the world’s leading exporter of black tea — the country’s largest foreign exchange earner last year.
Basic earnings per share fell to Sh15.9 from Sh17.3 in 2009, the firm said in a statement.
Kakuzi said it would pay a first and final dividend of Sh2.50, unchanged from the previous year.
The company said the onset of the rains last year improved grazing conditions, but significantly reduced demand for its cattle because farmers reared their own, buying less from Kakuzi.
Analysts said the company would benefit from a weaker shilling currency this year, as well as good rains, even though weather forecasts show an emerging drought is set to worsen.
The shilling has weakened in recent weeks and the Central Bank of Kenya has said this is due to market speculation that there was insufficient foreign exchange reserves to meet the needs of east Africa’s biggest economy.
"Foreign exchange will work in their favour this year if it continues to weaken, and if the rains hold it will be a good year for them," Samuel Wachira, general manager at Drummond Investment Bank said.