Stronger shilling, adverse weather sink Kakuzi to Sh130 million loss

The Kakuzi board of directors has recommended a Sh8 dividend per share after the agricultural firm reported a loss of Sh130.4 million for the year ended December 2024.

The firm attributed the performance to challenges in shipping routes, strengthening of the shilling against the US dollar, drop in avocado exports, and adverse weather conditions.

In the year ended December 2023, the firm reported a profit of Sh455.6 million. In the released financial statements, Kakuzi, however, notes improvements in its macadamia, livestock, and forestry division.

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“This significantly continues to impact the quality of fruits arriving in Europe,” he said.

He said Kakuzi’s 2024 avocado profits decreased to Sh361 million, down from Sh1.37 billion posted in the previous year, adding that the adverse weather experienced last year also led to a reduction in avocado yields, with total exports closing at 2,222,244 cartons, down from 3,074,105 cartons exported the previous year.

“The results reflect a number of challenges, including the excessive rainfall experienced in early 2024, which caused waterlogging, hampering fruit production. Consequently, fruit volumes for both Hass and Pinkerton avocados decreased by 23 and 19 per cent, respectively,” he said.

“The Kenya shilling also strengthened by 15 per cent against the Euro, which averaged Sh140 during the avocado export season, resulting in lower shilling revenues compared to the previous year when the Euro averaged Sh162.”

However, pre-tax profit for the macadamia divisional operations moved to a Sh69 million up from a Sh354 million loss in 2023.

Profits for the forestry and Livestock divisions also maintained an upward trend, which Kakuzi said validates its diversification strategy.

“The forestry unit profits soared to Sh288 million up from Sh149 million posted the previous year, while Livestock unit profits reached Sh31 million, recovering from a loss of Sh13 million realised in 2023,” said Mr Flowers.

He said the firm this year activated mitigation strategies to reduce the impact of logistical challenges by adapting to the longer delivery lead times.

“Whilst we hope that the geopolitical tension in the Middle East will ease, we must plan to continue with the rerouted logistics in 2025, and Kakuzi is doing all it can to focus on delivering quality products to the Company’s customers,” said Mr Flowers.

Kakuzi Chairman Nicholas Ng’ang’a noted that in order to reduce dependency on European markets, it is essential for both public and private stakeholders in Kenya’s avocado sector to explore high-value new markets.

He said while China and India hold potential, their current demand is still relatively low compared to Europe’s.

“In 2024, the USA consumed 1.3 million metric tonnes of avocados, compared to 0.9 million metric tonnes in Europe, with over 80 per cent of its avocados sourced from Mexico. The North American market presents a significant opportunity for Kenya,” he said. 

“As the largest consumer of avocados globally, the North American region must be considered a future target for Kenya’s exports.”