NAIROBI, KENYA, NOVEMBER 27 — Coffee company Eaagads Limited’s after-tax loss for the six months ended September 30 has widened by 127.3 per cent, as the firm faced stiff competition in the market.
The Nairobi Securities Exchange (NSE) listed firm’s losses more than doubled to Ksh46.6 million from Ksh20.5 million, its latest financials show.
Sales revenues dipped by 19 per cent to Ksh35.9 million compared to Ksh44.7 million it reported last year.
The drop has been blamed on reduced coffee volumes offered for sale which stood at 96 tonnes in half-year 2018 compared to 162 tonnes in 2017.
“The higher coffee volumes offered for sale in 2017 was primarily as a result of much higher coffee opening stocks in 2017 amounting to 111 tonnes compared to 10 tonnes at the beginning of 2018,” the firm said in its financials.
Early crop production volumes have however increased by 14.4 per cent-121 tonnes in 2018 compared to106 tonnes in 2017, as a result of good rains and improved crop husbandry management.
The sales prices achieved from the sales of coffee have also improved from US$2.6 per kilo for the corresponding period to US$3.3 per kilo for the period under review.
The firm however incurred more costs as it sought to safeguard the crop against an outbreak of Coffee Berry Disease. The Eaagads executed various preventive measures, which drove the cost of production upwards by 11 per cent.
This increased cost is expected to be overshadowed by improved crop production and hence revenues in the second half of the year.
The increase in revaluation surplus and in the non-current assets reflects the revaluation of Eaagads freehold land measuring 44 hectares. The remaining land measuring 385 HA is classified as a prepaid operating lease and is not subjected to a valuation.
Management have embarked on a coffee tree nutrition program to ensure that forecasted yield levels are attained for the late crop.
“ Sound strategies have also been put in place to ensure timely harvesting and processing so that quality is not compromised,” the firm notes.
To further enhance quality, Eaagads has invested in a newly installed heat exchanger to ensure faster skin drying thus reducing drying time and congestion especially during un-favorable weather.
Late crop pickings have exceeded budgeted expectations to date and according to management, the total 2018-2019 production is expected to be more than double that of the previous financial year.