Kakuzi Plc, a prominent superfoods producer listed on the Nairobi Securities Exchange (NSE: KUKZ), recently announced its 2024 financial results, revealing a pre-tax loss of Ksh 167 million. This downturn is attributed to adverse weather conditions, foreign currency fluctuations, and geopolitical tensions in the Middle East, which collectively created a challenging trading environment.
Despite the losses, the Kakuzi Board has recommended a first and final dividend of Ksh 8 per share. The company’s flagship avocado product faced quality issues upon arrival in European markets, primarily due to disruptions in traditional Red Sea shipping routes. Additionally, the strengthening of the Kenya Shilling led to foreign exchange losses of Ksh 197 million against US Dollar holdings, contrasting with foreign exchange gains of Ksh 118 million in 2023.
Kakuzi’s avocado profits declined to Ksh 361 million in 2024, down from Ksh 1.37 billion the previous year. Adverse weather conditions, including excessive rainfall causing waterlogging, resulted in a 23% decrease in Hass avocado yields and a 19% decrease in Pinkerton avocado yields. Total exports fell to 2,222,244 cartons from 3,074,105 cartons in the prior year.
On a positive note, Kakuzi’s diversification strategy showed promise:
- Macadamia Operations: Achieved a pre-tax profit of Ksh 69 million in 2024, recovering from a Ksh 354 million loss in the previous year.
- Forestry Unit: Profits soared to Ksh 288 million, up from Ksh 149 million.
- Livestock Unit: Recorded profits of Ksh 31 million, rebounding from a loss of Ksh 13 million in 2023.
Kakuzi has implemented mitigation strategies to address logistical challenges, including adapting to longer delivery lead times due to rerouted shipping around the Cape of Good Hope. Managing Director Chris Flowers emphasized the company’s commitment to delivering quality products despite ongoing geopolitical tensions.
To reduce dependency on European markets, Kakuzi is exploring high-value markets such as China, India, and North America. In 2024, the USA consumed 1.3 million metric tonnes of avocados, presenting a significant opportunity for Kenyan exporters. Kenya has already made strides by exporting avocados to China, Malaysia, and India, tapping into these burgeoning markets.
Kakuzi is investing in Agricultural Technology (AgTech) solutions to maximize yields and enhance efficiency. The company is monitoring advancements such as Artificial Intelligence (AI) and autonomous agricultural vehicles, including drones, to improve agricultural production.
Kakuzi Plc’s 2024 financial performance underscores the challenges faced by agricultural exporters amid adverse weather, currency fluctuations, and geopolitical tensions. However, the company’s diversification efforts, market expansion strategies, and investment in AgTech position it for resilience and future growth.
For Kenyan agribusinesses, Kakuzi’s experience highlights the importance of diversification, market exploration, and technological adoption. By embracing these strategies, companies can navigate challenges and capitalize on emerging opportunities in the global market.
