Kakuzi Half-Year Earnings Plunge 97.7% to KSh 10.4m on Geopolitical Instability Hiccups

Kakuzi Plc, an agricultural firm listed both in Nairobi and London Stock Exchanges, saw its 2026 half-year pre-tax profit drop 97.65% to KSh 10.4 million from KSh 435.2 million, with the firm declaring no interim dividends to its shareholders. The firm’s 2026 Half-Year Net Profit and Other Comprehensive Income plunged to KSh 7.1 million from KSh 295.5 million over the same period last year.

Kakuzi earnings hit by poor performance of Avocado, its flagship

Engaged in the cultivation, processing and marketing of avocados, blueberries, macadamia, tea, livestock and commercial forestry, Kakuzi posted the biggest loss in macadamia, whose earnings moved from KSh 318.8 million operating profit in H1 2025 to a KSh 68.2million operating loss. This deterioration was driven by rising global supply and weaker demand.

The global avocado market had excess supply, putting pressure on prices particularly in the latter part of the half year.

“At Kakuzi an anticipated significantly lower crop from our orchards and disrupted shipping routes has weighed heavily on returns with operating profit for orchards at half-year falling to KSh 215.9 million from KSh 394 million in first half of 2025,” said Nicholas Ng’ang’a, Kakuzi Board Chairman

Blueberry continued its trend of profitable growth, posting a half-year operating profit of KSh 15.1 million compared to KSh 13.4 million in H1 2025, notwithstanding freight complexity caused by conflict in the Middle East.

Forestry operating profit significantly improved in the half year to KSh 73.3 million from KSh 42.9milion in 2025 on continued strong demand for poles.

Tea and Livestock continue to perform, with a slight strengthening of the tea market.

Kakuzi Board View on the H1 Interim financial performance

According to Kakuzi Board, the firm’s performance in the first half was negatively impacted by geo-political instability, hitting key shipping routes into Europe, a lower anticipated overall avocado crop volume and a downturn in market demand for macadamia.

At the start of the year, the shipping routes through the Red Sea were beginning to return to normal, however the increasing tension in the region eventually forced the firm’s major shipping line to revert to the longer and more complicated Cape of Good Hope route.

The resulting increase in transit times, which have now reached the edge of what is technically possible for an avocado, have downgraded the quality and price expectations.

Climatic conditions during the third quarter of 2025, coinciding with the critical avocado fruit expansion phase, were exceptionally dry, and have resulted in less, and smaller, fruit than in a normal year.

While Kakuzi maintains substantial irrigation and water storage infrastructure, the challenge lay less in water availability than in the speed at which application could be adjusted to an event of this severity. The rate of moisture depletion experienced during the third quarter of 2025 was, in the Company’s experience, unprecedented, increasing water stress levels in its avocado orchards.

Kakuzi said it is accelerating its investment in continuous, multi-point digital soil-moisture monitoring, providing real-time data across the orchards to complement, and over time supersede, periodic manual assessment.

Macadamia production, given its different growing cycle, was less affected by the dry conditions. The challenge instead lay in the international market, which has once again been turbulent.

Global market conditions deteriorated for Macadamia

High production volumes from Australia and South Africa, combined with a slowdown in Chinese demand as domestic production there continues to rise, and a softer USA market linked to the legacy of tariffs, have together resulted in lower sales and pricing.

The firm’s forestry division has performed well. Demand for high quality poles continues to increase across all sectors which remains encouraging.

“Likewise, blueberry operations have performed well, with production sold across domestic and export markets despite geopolitical headwinds in the Middle East. The operational expansion project is in full swing,” said Ng’ang’a.

Kakuzi Share Price Performance:

The key question is whether the current earnings weakness is temporary commodity-cycle pressure or a structural deterioration in the business. At this stage, the evidence points more toward the former.

“Kakuzi remains exposed to several agricultural segments, meaning weakness in one crop can be partly offset by stronger performance elsewhere. The company’s productive assets and long-term agricultural positioning have not disappeared simply because macadamia prices have weakened. For investors, therefore, this 2026 interim half-year results should be viewed less as a failure of the Kakuzi engine and more as a stress test of its resilience through the agricultural cycle,”  said CFA Dedan Maina, Ketu Capital.

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