, NAIROBI, Kenya Dec 19 – Sasini Limited has posted a 32 percent drop in net profit for the year ended September 30, 2014 to Sh85.4 million from Sh126.8 million recorded over the same period last year.
The management attributed the decrease in profit as a result of significantly lower prices of tea and reduced production of coffee in the year under review.
The decline of tea auction persisted through the year mainly due to oversupply in the industry, changing consumer trends and political instability in major tea export destination countries.
The poor rainfall in the East and Rift Valley over the year adversely affected production volumes of coffee while increasing cost of production through increase Irrigation intervals.
“Coffee prices improved during the year following the poor performance of the Brazilian Coffee. However results were weighed down by the reduced production volumes for the year during to poor rainfall, ” said the management.
The board recommended the payment of the first and final dividend of 25 cents per share.
This comes as the government plans to audit the value chain of the tea sector in a bid to counter the issues that could inhibit growth of the sector.
Industrialisation Cabinet Secretary Adan Mohammed said that the value chain analysis will help the country identify its competitive edge in the sector.
READ: Govt to audit tea sector value chain
The weak market and depressed tea prices saw tea firms issue profit warnings for the second half of 2014.
Williamson Tea Kenya and Kapchorua Tea Company issued a 25 percent drop profit warning for the second half of 2014 compared to the same period previous year.
Both firms attribute the warning to the favourable weather conditions that will see the crop and stock levels continue to rise depressing the tea prices further as well as the global tea market that has no indication of picking up in the near future.