Eaagads Limited, a coffee-growing company based in Kiambu, has issued a profit warning ahead of its end year results announcement.
In its statement to shareholders, Eaagads Limited indicated that its earnings for the current financial year would be at least 25% lower compared to the previous period.
“Eaagads Limited hereby announces that the earnings for the current financial year will be lower by at least 25 per cent from the earnings reported for the same period in 2023,” read the statement from Eaagads in part.
This projection, according to the statement, is based on unaudited financial statements for the 11 months ending on February 29, 2024.
The company’s revenue for the year ended March 31, 2023, stood at Ksh234 million, with a gross profit of Ksh66 million.
Reason For Profit Warnings Amid Reforms
Eaagads cited a notable decrease in coffee sales as the primary reason for the projected decline in profits.
The timing of the profit warning coincides with efforts by the government, particularly spearheaded by Deputy President Rigathi Gachagua, to reform and revitalize the coffee industry.
President William Ruto’s administration has expressed a commitment to reviving the sector by exploring new markets for Kenyan coffee, particularly in Europe and North America.
Despite these initiatives, the coffee sector in Kenya has struggled in its recovery journey which explains the drop in the volume of coffee sales recorded by Eaagads.
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In the current year, the company managed to sell only 276 metric tonnes of coffee, a significant decrease from the 348 metric tonnes sold during a similar period in 2023.
This decrease in sales volume poses a considerable challenge to Eaagads’ financial performance and underscores the volatility of the coffee market.
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Eaagads Market Share
Eaagads is a significant player in the Kenyan coffee industry, boasting ownership of 205 hectares of coffee plantations in Kiambu County.
The company is listed on the Nairobi Securities Exchange (NSE) under the ticker symbol “EGAD” and has a market capitalization of Ksh449 million.
The company’s share price closed at Ksh13.95 on the last trading day, reflecting a 0.4% decrease from the previous closing price.
In comparison to its industry competitors, Eaagads faces stiff competition within the consumer goods sector.
Companies like Eveready East Africa Limited, East African Breweries Limited, and Williamson Tea Kenya Limited have demonstrated stronger year-to-date performances, further highlighting the competitive landscape Eaagads operates in.
