Food producer Kakuzi has issued a profit warning to shareholders today due to a poor avocado harvest and stiff competition among European buyers.
Total earnings for the year to December 31 will be at least 25 per cent lower than last year’s profits, the Kenya-based company said in a statement.
Chairman Nicholas Ng’ang’a explained that the company’s weaker yields were a result of stronger yields the year before, with avocados being a fruit of bi-annual production.
With avocados taking off among European consumers, the London-listed producer has also had to battle against lower prices in the continent amid an oversupply of fruit from Peru and Columbia.
Despite the warning, the food producers share price remained unchanged.
“As a responsible listed entity, we are taking this early opportunity to issue the profit warning notice,” Ng’ang’a said, adding that, “Even as we expect recovery, the board is stepping up the execution efforts on our product diversification strategy, which is of critical importance.
“This strategy aims to mitigate the global market volatility and overreliance on any one product.”
The more-than-ready market for the popular fruit in Europe and elsewhere has encouraged farmers in the region to give up maize for avocados, according to local media outlet The Star.
Due to climate change and high production costs, local farmers have been encouraged to diversify their crops to more high-value alternatives like avocados, coffee, macadamia and bananas.