Listed agriculture firm Sasini has issued a profit warning for the year ending September 2016, attributing the drop to the effect of the one-off gain on a land sale made last year.
Sasini’s profit in the year ending September 2015 had been boosted massively by the sale of 513.7 acres of its land in Nyeri for Sh1 billion. The sale pushed the firm’s net earnings to Sh1.1 billion, from Sh45.4 million in 2014.
The sold land was held in its two coffee estates in Nyeri–Mweiga (266.7 acres) and Wahenya (247 acres) — which it said had been returning losses for six consecutive years.
“The drop in profits was primarily occasioned by the fact that the financial statements for the year ended September 30, 2015 included a significant one-off net capital gain relating to the disposal of land,” said Sasini chairman James Mcfie in a statement.
Absent such a deal this year, the firm expects its profit to fall by at least 25 per cent, meaning that the maximum earnings shareholders can expect is Sh825 million.
In the six months ended March 2016, Sasini reported a net profit of Sh522.3 million.
In the first half of the financial year, the firm’s revenue grew to Sh1.59 billion from Sh1.27 billion in a comparable period in 2014, driven by higher production volumes and prices of its tea.
However, when it was releasing its half year results in May, Sasini projected that the returns from tea and coffee would be lower in the second half of the year due to falling prices starting from April onwards.
The firm has also announced a second interim dividend of Sh1.25 a share to be paid to shareholders next month. Sasini had paid an interim dividend of 25 cents for the six months ended March.