Listed tea grower Limuru Tea has warned its shareholders of a significant earnings downturn, saying its profits are expected to drop sharply this year. In an announcement on February 27, the company says it expects its full-year profit to drop by more than 25% after reviewing its preliminary financial results.
“The Company is expected to record a decline of more than 25% in profit after tax attributable to the shareholders of the Company for the financial year ending 31 December 2025 as compared with that for the same period ending 31 December 2024,” read part of the notice.
Reasons Behind the Expected Profit Decline
According to the board, the decline is mainly due to higher labour costs following wage increases and weak tea prices at the Mombasa Tea Auction. The company noted that tea prices fell between 2024 and 2025 because global demand reduced while Kenyan stock levels remained high.
Limuru Tea added that the profit warning is only based on the information currently available to the Board and a preliminary evaluation of the financial statements of the company for the period of 12 months, and the final audited financial results for the financial year ended 31 December 2025 will be released by the end of March 2026.
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The announcement was approved by the Capital Markets Authority (CMA).
“As a matter of policy, the CMA does not assume responsibility for the accuracy of any of the statements made or opinions or reports expressed or referred to in this announcement,” wrote Limuru Tea.
Previous Profit Warning
In 2024, Limuru Tea issued a profit warning informing investors that its earnings for the year ending December 31, 2023, were expected to fall by more than 25 percent compared to the previous year.
“The Board of Directors of Limuru Tea PLC (“the Company”) hereby informs holders of securities issued by the Company and the public that, based on a preliminary review of the financial statements of the Company,” read part of the 2024 announcement.
The company attributed the expected decline to several operational challenges that continued to weigh heavily on its business throughout the year. It explained that labour costs had gone up significantly due to higher industry wage rates, which pushed up the overall cost of running the tea estates.
At the same time, the company faced higher import costs for fertilizer, as the weakening of the Kenya shilling against the US dollar made these essential farm inputs more expensive.
Limuru Tea also pointed to a projected decline in the valuation of its biological assets, mainly its tea bushes, reflecting lower expected future yields and reduced market value. These combined pressures made it harder to maintain profitability, contributing to the sharp drop in earnings reported to shareholders.
Limuru Tea Company
Limuru Tea PLC is one of Kenya’s oldest tea companies, having been around since 1925 and listed on the Nairobi Securities Exchange for decades.
The company owns about 282 hectares of tea plantation near Limuru Town, where it grows green leaf tea, which is later processed and sold mostly for export. Limuru Tea supplies all its green leaf to Browns East Africa Plantations PLC (BEAP), which handles the processing and sale of the tea on its behalf.
Although it is a relatively small company with around 418 employees, it remains an important player in the local tea industry. For investors, the company has faced several tough years as rising wage costs, unstable global tea prices, and lower valuations of its tea bushes have continued to weigh down its earnings and overall profitability.
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