NAIROBI, KENYA, MAY 19 — Kenyan based coffee grower- Eaagads Limited (Plc) has warned that its earnings for the current financial year will be lower by at least 25 per cent from the earnings reported for the same period in 2017.
The company which is headquartered in Nairobi, with coffee firms in Kiambu County, has said its profit margins have been partly affected by coffee prices at the New York Coffee Exchange (Futures) market price, which principally determines the price of coffee.
The main contributor to the reduction in the profits, however remains lower coffee volumes offered to the auction owing to lower production levels and lower quality beans which affected the prices achieved, the firm said.
Listed on the Nairobi Securities Exchange, Eaagads is engaged in growing, blending and selling of coffee products both locally and in the International market.
During the financial year, the Company incurred an after tax loss of Ksh46.7 million compared to a profit of Ksh 18.1 million in the same period last year.
“ Eaagads Limited (the “Company”) hereby announces that the earnings for the current financial year will be lower by at least 25 per cent from the earnings reported for the same period in 2017. This announcement is based on the unaudited financial statements of the Company for the year ended 31 March 2018,” it said in a statement.
“This was solely attributable to the severe drought experienced in Kenya in late 2016 early 2017. In addition, coffee prices were affected by the New York Coffee Exchange market price,” the company added in a statement by the board of directors.
More than 76 per cent of Eaagads coffee was sold through the auction during the financial year.
The combination of these factors caused a dip in the sales revenues alone of Ksh56.5 million.
The loss position was also further exacerbated by an increase in coffee production costs, notably due to increased labour costs, which went up by 29 per cent as well as other upkeep costs, which went up by Ksh45.5 million, the firm said.
This is amid cost savings in the administration costs which dropped by Ksh12.2 million.