Fruit grower and exporter Kakuzi said it is typical for avocados to have on boom year followed by a subdued harvest the following year.

Nairobi Securities Exchange listed avocado exporter Kakuzi is set to increase its dividend payout to Kes431.1 million or Sh22 per share despite a 48.5 percent drop in profitability to Kes319 million for the year ending December 2021 on cyclic dips in productivity.

Last year Kakuzi paid out Kes352.7 million or Kes18 a share on a bumper harvest that saw the grower make Kes622 million in net profit.

Kakuzi said it is typical for avocados to have on boom year followed by a subdued harvest the following year.

The grower also said avocado prices dipped compared to the previous year hurting earnings blaming the oversupply of the fruit from Peru and Columbia, which hurt selling prices during the same period when the company was also in the market.

“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 which results in a large crop of avocados in one year, followed by a small crop the following year,” Kakuzi Chairman Nicholas Ng’ang’a said.

Read also: Equity resumes dividend payout for the first time since 2018

Kakuzi has issued a profit warning for the year ended December, citing reduced avocado production and lower prices of the commodity in European markets signaling a decline of more than 25 percent in earnings.

The 48.5 percent drop is steep considering the company said its Hass avocado production declined 18 percent in the review period compared to 2020.

The drop in production is in line with the phenomenon of a bountiful year followed by reduced output in the following year.

The fruit exporter’s diversified earnings from macadamia failed to supplement avocado income, but the firm said earnings from diversification helped shore up the decline.

Mr Ng’ang’a said product diversification and value addition remain key investment areas to enhanced stakeholder value and our continued commitment to these is critical for the long term.

“We, however, experienced greater earnings from macadamia sales during the year as a result of increased yields from our young orchards,” he said.

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