Williamson Tea sinks to Sh85m half year net loss

Companies

Monday, November 26, 2018 10:55

By PATRICK ALUSHULA

Williamson Tea Kenya #ticker:WTK has sunk into Sh85 million net loss for the half year period ended September 2018 on depressed tea prices, down from the previous year’s profit of Sh43.4 million.

The losses were booked despite increased tea production due to favourable weather conditions lifting turnover by 13.4 per cent to Sh1.97 billion from Sh1.73 billion booked in a similar period last year.

Operating profit fell by 40 per cent to Sh16.78 million on higher costs. Fair value of biological assets, mainly made up of value of tea growing in the farm, dropped by Sh50.2 million reflecting depressed prices of the commodity.

Last year, the Nairobi Securities Exchange-listed tea grower had booked a Sh17.1 million gain.

“The increased quantities of tea available for sale significantly depressed the prices leading to the first half of the year losses. Mombasa auction prices declined by 15 per cent to 20 per cent during the period under review,” said the firm in a notice sent to the NSE today.

Finance costs hit Sh43.2 million, reversing the Sh24 million booked last year as finance income.

At the same time, the firm took a Sh43.2 million hit as share of loss from its associated companies. This was about six times larger than the Sh7.7 million loss from associates in the previous half year period.

The firm has painted a grim picture going forward. It said in a commentary to the results that it sees tea prices remaining depressed.

“The amount of tea on offer remains high and unless this situation alters and less supply materializes, we do not envisage much change to demand,” said the company.

“The future therefore remains unpredictable with the advantage on the buying side as we approach the last quarter.”

In addition, it said that wage negotiations from the year 2016 are yet to be concluded, therefore adding uncertainty to its already high cost of doing business.