Kakuzi taps into reserves to pay record dividend

Kakuzi Chairman Nicholas Ng'ang'a [David Njaaga, Standard]

Agricultural firm Kakuzi has tapped into retained earnings to pay its highest ever dividends despite reporting the lowest profit in seven years.

The firm yesterday announced a 48.6 per cent decline in net profit to Sh319.7 million in the financial year ended December 2021, compared to Sh622 million in the preceding year.

The profit drop, which the firm blamed on reduced avocado exports and depressed prices, sent its earnings to levels last seen in 2014 when profit was Sh160.2 million.

“The year saw the group post reduced earnings due to lower avocado production and prices. This was due to the avocado orchards entering their bi-annual offseason bearing cycle,” said Kakuzi Chairman Mr Nicholas Ng’ang’a (pictured).

Kakuzi announced a Sh22 per share dividend, a 22 per cent increase from Sh18 per share paid previously. The dividend payout will amount to Sh431.2 million, the highest in the history of the company and more than the latest profit, meaning the firm will tap into its retained earnings.

Top shareholder John Kibunga Kimani, with a 32.34 per cent stake, will pocket Sh139.45 million, coming on the back of his acquisition of 7,400 additional shares last year.

Paying dividends above the net profit will see the firm tap into retained earnings for Sh111 million and cut the reserves from Sh5.08 billion to Sh4.97 billion.

The latest payout is more than the Sh353.8 million that Kakuzi paid for the 2020 performance.

The firm was paying between Sh5 and Sh9 per share from 2015 but jumped into double digits in 2019.

Avocado accounted for 50.8 per cent of Kakuzi’s sales last year, highlighting the concentration and commodity risk the firm faces as the price fluctuates.

The company has not entered into any derivative transactions to limit commodity price risk that also extends to other crops including tea and macadamia.