Kenya's Limuru Tea 1st-half profit drops 42 pct on weaker prices
19 August 2014, 08:23
Nairobi - Kenyan agricultural firm Limuru Tea reported a 42 percent drop in first-half pretax profit and forecast lower revenue in the second half of the year, blaming weaker tea prices for both declines.
Kenya is the world's leading black tea exporter, and the crop is a major foreign exchange earner in east Africa's largest economy alongside horticulture, remittances and tourism.
Increased production due to favourable weather this term has dented prices sharply, the company said in a statement on Monday.
Pretax profit fell to 10.8 million Kenyan shillings ($122,448), after revenue fell by 18 percent to 48 million shillings.
Prices for the six months to the end of June declined by 19 percent from the year-ago period, Limuru said.
For the first half, Limuru Tea produced 1.6 million kg of green leaf, which was processed into 378 tonnes of black tea, a 9 percent jump from the year-ago period.
"If the price trend persists, we expect revenues in the second half to be lower compared to 2013," the company said.
The company said it would not pay a dividend, similar to its stance for the first half of 2013.
Tea exports from the east African country rose slightly in the first six months, while the average prices dipped at auction and output was steady, the regulator Tea Board of Kenya said on Aug. 6.