Kakuzi Battles Geopolitical, Weather, & Forex Storms in 2024
Laban Mwaura, Extension Officer,Chairman of Kakuzi Plc Board, Nicholas NgangaMs Pamela Ager – Independent Director, Chris Flowers Managing Director
Kakuzi Battles Geopolitical, Weather, & Forex Storms in 2024
Financial Challenges and Market Disruptions
Geopolitical tensions, adverse weather, and foreign exchange fluctuations created a challenging trading environment for Kakuzi Plc (NSE: KUKZ) in 2024 https://www.kakuzi.co.ke/. The company reported a pre-tax loss of Ksh 167 million.
Kakuzi’s Board announced its 2024 financial results today and recommended a first and final dividend of Ksh 8 per share. The board also confirmed that disruptions in the Red Sea shipping routes negatively affected the arrival quality of its flagship avocado product in European markets.
The strengthening of the Kenya Shilling also impacted Kakuzi’s financial performance. The company incurred foreign exchange losses of Ksh 197 million on its US Dollar holdings, a sharp contrast to the Ksh 118 million gain recorded in 2023.
Managing Director Chris Flowers highlighted the shipping challenges. The only alternative route, around the Cape of Good Hope, extends delivery times by two weeks, reducing fruit quality upon arrival in Europe.
Kakuzi’s avocado profits declined to Ksh 361 million, down from Ksh 1.37 billion in 2023. Adverse weather reduced avocado yields, with total exports falling to 2,222,244 cartons from 3,074,105 cartons the previous year.
Kakuzi Battles Geopolitical, Weather, & Forex Storms in 2024
Growth Amidst Adversity
Despite these challenges, the macadamia division rebounded, posting a Ksh 69 million pre-tax profit in 2024, recovering from a Ksh 354 million loss. Forestry and Livestock divisions also showed growth.
Forestry unit profits rose to Ksh 288 million from Ksh 149 million, while Livestock profits reached Ksh 31 million, reversing a Ksh 13 million loss in 2023.
Excessive rainfall in early 2024 caused waterlogging, reducing avocado yields. Hass and Pinkerton avocado volumes dropped by 23% and 19%, respectively. Additionally, the Kenya Shilling’s 15% appreciation against the Euro lowered revenue. The Euro averaged Ksh 140 during the avocado export season, compared to Ksh 162 the previous year.
Kakuzi has implemented mitigation strategies to address logistical challenges. Flowers stated that while the company hopes for reduced geopolitical tensions, it is preparing for continued rerouted logistics in 2025 to maintain product quality.
Chairman Nicholas Ng’ang’a emphasized the need to explore high-value markets beyond Europe. While China and India present opportunities, North America remains a key target.
In 2024, the USA consumed 1.3 million metric tonnes of avocados, compared to 0.9 million in Europe. With over 80% of U.S. avocados sourced from Mexico, Kenya has a significant opportunity to enter this market.
Kakuzi will continue leveraging Agricultural Technology (AgTech) to maximize yields. Ng’ang’a noted the rapid adoption of Artificial Intelligence (AI) and autonomous agricultural vehicles, such as drones, which are enhancing global agricultural efficiency.
More reads on https://africabusinessnews.co.ke/kakuzi-to-offer-free-fruit-maturity-testing-services-f/
