Listed Kenyan agricultural company, Kakuzi Plc has joined the growing list of companies issuing profit warnings.
The company announced this in a statement dated December 5, 2023.
Kakuzi chairman, Nicholas Nganga revealed that the company was suffering from dwindling profits, blaming a drop in demand of the macadamia nut, which is a core strategic crop for Kakuzi Plc.
“The Group currently forecasts that net earnings for financial year 2023 may be at least 25% lower than those of financial year 2022,” the statement read, in part.
Further, Kakuzi Plc explained the drop was not a surprise to the management.
“The anticipated drop in full year net earnings is mainly as a result of our Macadamia business which is expected to post a loss due to a significant decline in demand and price in the global markets of China, Japan and the USA,” Kakuzi noted.
However, on an optimistic note, the agricultural company announced that the other crops have been performing well as per expectations.
On this, the company revealed that it expected a strong performance from avocado sales.
“This profit warning announcement is based on the performance to date with reference to information currently available,” Kakuzi, however clarified.
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Value of Kakuzi Plc Stocks in the Market
Of note, Kakuzi Plc is listed on both the Nairobi and London Stock Exchange. The company engages in the cultivation, processing and marketing of avocados, blueberries, macadamia, tea, livestock and commercial forestry.
Additionally, the agricultural company is one of the most expensive stocks traded on the Nairobi Securities Exchange – NSE. Currently, as of the trading day closed on December 5, 2023, the company’s stocks traded at Kshs406 per share.
This was a gain from Kshs385 per share the previous day.
Trend of Macadamia Production in the Company
What’s more, in the unaudited financial results for the six months ended in June, Kakuzi Plc noted that the macadamia fruit was currently in high global supply, thereby in turn reducing the prices for the nut.
“Global macadamia glut persists leading to a Ksh329 million sectoral loss for the macadamia business,” the results denoted.
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However, Kakuzi hoped for a recovery in macadamia domestic market retail sales as it doubled up on efforts to mitigate international market risks.
Notably, there are approximately 6,000 macadamia farmers in the country, with the majority domiciled in the Mount Kenya region.
In April 2023, former Cabinet Secretary for trade, Moses Kuria announced a temporary lift on the ban on export of raw macadamia nuts which had been in place since 2015.
The move was to offer macadamia growers better prices.
