Listed agri-business firm and superfoods producer Kakuzi Plc (NSE: KUKZ) has announced a Ksh507 million half-year pretax profit on the back of a general market recovery for its macadamia nuts and avocado superfoods exports business.
Kakuzi PLC Managing Director Mr Chris Flowers said the firm’s half-year results had been positively impacted by a buoyant international avocado market, created mainly by subdued global supply. He added that international demand for macadamia nuts has also returned to pre-COVID levels, with prices steadily growing but still lagging at the 2021 levels.
The firm’s total turnover grew by 35% to Ksh1.175 billion, up from Ksh873 million posted in the same half-year period last year.
Buoyed by lower market supply from traditional high-volume avocado suppliers in the international market from South American countries such as Peru and Mexico, Kakuzi’s avocado fortunes enjoyed a 42% growth to close the half-year trading period at Ksh951 million, up from Ksh670 million posted within the same period, last year.
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Kakuzi’s macadamia earnings have now returned to a profit zone, with a Ksh32 million profit, up from a Ksh329 million loss posted within the same period last year. Demand for the firm’s sustainable wood products continued to soar in the half-year trading period, with divisional profits growing 54% to Ksh71 million, up from Ksh46 million posted in the same period last year.
“In line with our expectations, the global macadamia industry has taken a positive turn, with all markets recording a return to near normal (pre-COVID) demand levels. Global stock levels from 2023 have largely been consumed, and 2024’s production, which is currently being harvested and processed, is well-committed to the market,” Mr Flowers said.
Despite the challenges posed by reduced avocado production in Peru and Mexico, Kakuzi has shown resilience in the face of a tight supply situation in Europe and the USA, he said. “The impact of climate change on agriculture, including our own, has been significant, with the rainfall last April nearly double the normal amount, negatively affecting avocado production. However, we remain steadfast in our commitment to overcoming these challenges,” said Mr Flowers.
Despite a tough operating environment, Kakuzi Plc Board Chairman, Mr Nicholas Ng’ang’a, reiterated the firm’s commitment to promoting responsibly grown Kenyan superfoods in both traditional and emerging markets. Quality, traceability, and sustainability will continue to be Kakuzi’s key operating pillars. “We are proud to see more and more customers appreciating our value-added and fresh produce range of edible oil, fresh meats, and roasted and coated macadamia nuts,” he said.
Transit times extended
Mr Ng’ang’a noted that the political situation in and around the Red Sea has effectively forced all the major shipping lines to travel around the Cape rather than through the Suez Canal. As a result, transit times for Kenyan avocados have been extended to nearly the edge of what is possible, which manifests in some quality problems.
“These challenges underscore the critical need to diversify our markets. We acknowledge that while China, India, and the Middle East offer long-term growth possibilities, they currently lack the scale to substitute Europe. However, exploring these markets could provide a buffer against future market disruptions,” Mr Ng’ang’a said.
Early this year (March 2024), Kakuzi entered the Indian avocado export market. The firm, which has enjoyed traditional market access opportunities in Europe, China, and the Middle East, is pursuing strategic market diversification strategies, with new opportunities for avocado sales in India and Malaysia that are high on the business development priority list.
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