Sasini reports 53% dip in profits during financial year 2023 

KENYA – Sasini Tea & Coffee, a prominent player in Kenya’s tea and coffee production sector, has reported a 53.6 percent decline in its net profits, plunging to Sh542.6 million (US$3.43M).  

This decline comes on the heels of a seven-year high, with the company’s net profit peaking at Kes1.17 billion (US$7.39M).

The management attributes this sharp decline to what they describe as an “extremely challenging” period, primarily driven by adverse weather conditions, particularly in the first half of the year. 

“The effect on the business was drastic in all units as manifested in lower production volumes, lower price realisations and higher costs of production,” said the board. Revenue took a hit as well, falling by 22 percent to Kes5.72 billion (US$36.15M).  

Additionally, administration and establishment expenses increased from Kes997.7 million (US$6.3M) to Kes1 billion (US$6.32M), contributing to the overall decline in the bottom line. Finance costs nearly doubled, rising from Kes28.25 million (US$178,515) to Kes55.65 million (US$351,658). 

A collapse in the macadamia market, coupled with the recession in the US, showcased the global interconnectedness of markets and their vulnerability to economic downturns

The delayed start of the avocado export season further added to Sasini’s financial woes, emphasizing the complex challenges faced by the agricultural sector. 

Despite these setbacks, Sasini highlighted some positive earnings. The tea, avocado, and coffee trading units managed to stay profitable, with the tea business unit achieving its highest-ever performance from operating activities despite the early-year adverse weather conditions.  

“As a result of the multiple shocks and economic uncertainties aggravated by the effects of climate change, some of the business units were more adversely affected than others. Only the tea, avocado, and coffee trading units were profitable. The coffee estates and the macadamia units recorded negative results,” said the firm. 

The management remains resilient, expressing its commitment to seek and establish strategic partnerships to navigate the changing business environment and enhance shareholder value. 

In surprising move, Sasini has increased its dividend payout by 50 percent to Kes342.1 million (US$2.16M), even in the face of declining profits.  

The board announced a final dividend of Kes0.50 per share, totaling US$721,958, in addition to the Kes1 per share interim dividend, which amounted to US$1.4 million, paid in July last year. 

This decline in profits follows a profit warning issued by Sasini in November 2023, indicating a level of foresight in anticipating financial challenges. However, the severity of the economic conditions is underscored by the fact that such a substantial decline could not be averted. 

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