Kakuzi Issues Profit Warning On Reduced Avocado Production

Kenya’s largest avocado exporter, Kakuzi PLC, has issued a profit warning indicating turbulent times for the firm.

A profit warning is an indication that the profits for a certain firm will dip by 25 percent or more, as compared to the previous year.

“Kakuzi Plc issues this profit warning notice and cautionary statement to our current
investors, potential investors and the general public. This profit warning notice arises from
trading information, market forecasts and the preliminary unaudited full-year financial
results, among other data sources currently at the Board’s disposal. We, therefore, wish to
report that our net earnings for the year ended 31st December 2021 will potentially be at
least 25 percnt lower than that reported for the year ended 31st December 2020,” said Kakuzi Board Chairman Nicholas Ng’ang’a.

The anticipated drop in full-year earnings is principally as a result of Hass avocado production which is prone to a year of low production after a year of high production (a principle known as biannual bearing).

According to Kakuzi, 2021 Hass production was 18 percent lower than 2020.

“As announced in the half-year trading results commentary, the lower yield was anticipated,” said Ng’ang’a.

The drop in profits is also attributed to lower global market prices in European markets. This is due to an oversupply of fruit from Peru and Columbia which impacted prices during the same period that Kenyan fruit was also in the market.

“However, our other crops have performed as expected with an increasingly strong performance from the macadamia business, which validates the investments made into
diversification over the years,” added Ng’ang’a.

“Continuing this product diversification strategy is of critical importance. This strategy aims
to mitigate the global market volatility and overreliance on any one product.”

In 2020, UK supermarket giant Tesco suspended the supply of avocados from Kakuzi following accusations of gross human rights abuses.

Tesco which is Britain’s largest grocery retailer announced the move after law firm Leigh Day said it had filed a case against UK firm Camellia which owns a 50.7 percent stake in Kakuzi.

Kakuzi supplies avocados to several UK supermarkets, including Sainsbury’s and Tesco.

Camellia Plc is listed on the London Stock Exchange (LSE) and is a large agricultural business that owns plantations around the world, employs over 78,000 people, and in 2019 generated revenues in excess of £290 million (US$377 million), according to Leigh Day.

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