Listed agri-business firm and superfoods producer Kakuzi Plc (NSE: KUKZ) has reported a robust Kshs 507 million half-year pretax profit, driven by a market recovery in its Macadamia Nuts and Avocado superfoods export business. The positive performance marks a significant turnaround for the company, which has successfully navigated challenges in the global market to return to profitability.
Announcing the results, Kakuzi Plc Managing Director Mr. Chris Flowers attributed the strong financial performance to a buoyant international avocado market. The subdued global supply of avocados, particularly from major South American producers like Peru and Mexico, created favorable conditions for Kakuzi’s exports. This market dynamic allowed Kakuzi to record a 42% growth in avocado earnings, reaching Kshs 951 million, up from Kshs 670 million in the same period last year.
The macadamia division, which had been underperforming in recent years, has also shown a remarkable recovery. After posting a loss of Kshs 329 million in the first half of the previous year, the division has returned to profitability with a Kshs 32 million gain. This turnaround is primarily attributed to the resurgence in international demand for macadamia nuts, which has now returned to pre-COVID-19 levels. While prices have not yet reached the highs of 2021, they are steadily improving, offering a positive outlook for the future.
Overall, Kakuzi’s total turnover grew by 35% to Kshs 1.175 billion, up from Kshs 873 million in the same half-year period last year. The firm’s diversification into sustainable wood products also paid off, with profits in this division growing by 54% to Kshs 71 million, compared to Kshs 46 million in the previous year.
Despite these positive results, Mr. Flowers acknowledged the challenges posed by climate change and the impact on agricultural production. He noted that unusually heavy rains in April had nearly doubled the normal rainfall, negatively affecting avocado production. However, he expressed confidence in the company’s resilience and its ability to overcome these challenges. The heavy rains, while disruptive, also replenished Kakuzi’s water reservoirs, ensuring adequate resources for future agricultural activities.
Kakuzi Plc Board Chairman Mr. Nicholas Ng’ang’a emphasized the company’s commitment to promoting responsibly grown Kenyan superfoods in both traditional and emerging markets. He highlighted the importance of quality, traceability, and sustainability as key pillars of Kakuzi’s operations. Mr. Ng’ang’a also pointed out the challenges faced by the firm due to the political situation around the Red Sea, which has forced major shipping lines to reroute around the Cape of Good Hope, extending transit times for Kenyan avocados and leading to some quality issues.
To mitigate such challenges, Mr. Ng’ang’a stressed the need for market diversification. While Europe remains a key market, the firm is exploring growth opportunities in China, India, and the Middle East. These markets, though not yet capable of replacing Europe in scale, offer long-term potential and could provide a buffer against future disruptions.
Kakuzi’s strategic expansion continues, with the company making its first foray into the Indian avocado export market earlier this year. The firm is also exploring new opportunities in Malaysia, further diversifying its market base. In response to growing global demand for quality superfoods, Kakuzi expanded its avocado orchards by 60 hectares last year, bringing the total to 927 hectares, with an investment of Kshs 120 million.
Mr. Flowers concluded by highlighting the success of the Kakuzi Farm Market, a hub for local entrepreneurs to form business partnerships with Kakuzi. This initiative, along with the company’s focus on farm-to-fork credentials, underscores Kakuzi’s commitment to meeting the evolving preferences of discerning consumers. As demand for retail products in the domestic market rises, Kakuzi is poised to continue its growth trajectory, ensuring it meets the needs of its customers while maintaining its commitment to sustainability.
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