Kakuzi Plc, a leading agricultural company listed on the Nairobi Securities Exchange, has issued a profit warning, anticipating a decline in net earnings for the financial year ending December 31, 2024. The company expects profits to drop by more than 25% compared to 2023, citing lower avocado exports and disrupted supply chains as key contributors to the downturn.
In a cautionary statement released on November 26, 2024, Kakuzi attributed the earnings decline to reduced avocado crop yields and logistical challenges exacerbated by geopolitical tensions in the Middle East. The effective closure of the Red Sea shipping route—vital for reaching European markets—has forced the company to rely on longer routes around the Cape of Good Hope, resulting in delays and significant spoilage of perishable produce.
Despite these headwinds, Kakuzi reported a positive outlook for its macadamia business, which has experienced strong demand and higher prices in 2024. The company’s order books for macadamia products are full, and prices have nearly doubled compared to the same period last year. However, the gains in macadamia revenue are insufficient to offset the losses incurred from avocado exports.
Kakuzi Chairman Nicholas Ng’ang’a emphasized the company’s commitment to transparency with investors, stating that the announcement complies with regulatory provisions under the Capital Markets (Public Offers, Listing and Disclosures) Regulations, 2023. The company also reassured stakeholders that the profit warning is based on unaudited results to October 31, 2024, alongside market forecasts and other data currently available to the board.
The statement reflects the dual challenges and opportunities facing Kakuzi’s diverse portfolio of agricultural products. While geopolitical instability and climate-related impacts continue to affect the avocado segment, the resilience of the macadamia market underscores the potential for growth in alternative revenue streams.
