Eaagads issues profit warning as Half Year loss hits 43.3 Million.
Coffee farm Eaagads Limited has once again issued a profit warning to shareholders for the Financial year ending March 2020. These projections are based on projections of the Half year results which the company released today. This means the profits of the company will be 25% lower or more.
In the Half year results, the Company incurred an after tax loss of Kshs. 43.3 Million, as compared to an after tax loss of Kshs.46.6 million in the previous year. The realized sales revenues were Kshs. 14.9 million (2018: Kshs. 35.9 million) which were affected by the depressed international coffee prices due to an oversupply in the South American countries amid suppressed production volumes due to lower than projected coffee volumes.
Early crop volumes for the six month period decreased by 44% to 46Tons in 2019 as compared to 94Tons in 2018 as a result of severe drought in the first half of the year, coupled by high temperatures. Coffee is especially sensitive to such high temperatures, a factor that contributed to poor flowering of the crop. The coffee average prices decreased by more than 25% [ 2019: $2.81, 2018: $3.73] in the period under review.
The company has attributed the drop in profits on a dip in coffee production levels with an increase in production costs at the firm. They also blamed this on erratic and unpredictable weather based on global warming.
The Company’s coffee bushes are in good shape under the management of CMS. Management has continued to embark on coffee tree nutrition practices to ensure that Eaagads coffee quality levels are not compromised. Prudent cost management will also result in cost savings.
The Board of Directors have not recommended the payment of an interim dividend