Economy
Limuru Tea issues profit warning on higher costs
Friday January 12 2024
Nairobi Securities Exchange (NSE) trading floor. FILE PHOTO | DIANA NGILA | NMG
Limuru Tea Plc joins 13 other companies that have issued profit warnings to investors since last year, citing higher costs and a valuation decline on assets.
The Nairobi Securities Exchange-listed firm adds to the list of other agricultural companies to warn shareholders of a lower profit by at least a quarter including Kakuzi and Sasini.
“The Board of Directors of Limuru Tea Plc hereby informs holders of securities issued by the company and the general public that based on a preliminary review of the financial statements, the company is expected to record a decline of more than 25 percent in profit before tax for the financial year ending 31st December 2023,” Limuru Tea said in a statement.
Other companies that have issued warnings that their profits will fall by 25 percent or more than the year before include Unga Group, Sanlam Kenya, Express Kenya, Sameer Africa, WPP Scangroup, Crown Paints, Car & General and Nation Media Group.
Read: Profit alerts hit 12 as firms cite cost pain
A majority of them cite a tough operating environment that includes the high cost of doing business.
“The board is of the view that the estimated decrease in the results for the period is due to increased operational costs attributed to increased cost of labour driven by higher industry wage rates,” Limuru Tea said.
“The importation cost of fertiliser which was adversely impacted by the depreciation of the Kenya shilling against the US Dollar and a projected loss in biological asset valuation for the year 2023.”
The listed agricultural firm posted a profit after tax of Sh11.345 million in the year ended December 2022 and expects a profit of no more than Sh8.5 million in the year ended last month.
The 2022 performance reversed a net loss of Sh9.5 million in the prior year and which was driven by, among others, lower sales.
Companies are required by law to issue profit warnings at least 24 hours before they publish full-year results which show that their earnings have dropped by a quarter or more compared to the prior year.
