This archive report was first published on 6 January 2022.
On January 6, 2022, Kakuzi Plc, a leading agribusiness firm, issued a procedural profit warning notice, citing lower production and export of avocado fruits as the primary cause of anticipated lower full-year earnings.
The notice, as required by the Capital Markets regulatory requirements, confirms that the firm's earnings will be at least 25% lower than those reported for the year ended December 31, 2020.
According to Kakuzi Plc Chairman Nicholas Ng'ang'a, the firm's earnings have been affected by lower yields due to the bi-annual production cycle of the productive avocado orchards, resulting in lower volumes than in 2020.
Ng'ang'a noted that the firm's order book from international markets far exceeds the farm yield volumes, emphasizing the need to accelerate the execution of a product and markets diversification strategy.
The strategy aims to mitigate global market volatility and overreliance on the flagship export product, with a focus on enhanced domestic sales and diversification into other crops and revenue streams.
Ng'ang'a also highlighted the impact of lower market prices in European key markets due to a significantly higher supply of fruit from Peru and Colombia, amidst low consumption trends due to the Covid pandemic.
However, he added that Kakuzi's other crops and revenue streams have performed as expected, with an increasingly strong performance from the Macadamia business, validating the investments made into diversification over the years.
As a responsible listed entity, Kakuzi is taking this early opportunity to issue the profit warning notice, which is consistent with the half-year earnings statement and commentary issued in August last year.
