NAIROBI, Kenya- Sasini has issued a profit warning for the fiscal year ending September 30, 2024.
The agricultural giant has pointed to a perfect storm of rising production costs, falling commodity prices, and supply chain disruptions as the primary factors behind this anticipated decline.
This marks a challenging period for Sasini, with the company expecting net profits to dip by 25pc compared to the same period last year.
Sasini’s financial outlook has been severely impacted by a combination of skyrocketing production costs and decreased demand in key markets.
The company has cited a 54pc surge in the cost of sales, contributing to a net loss of Ksh. 37.7 million in its half-year financial results.
This increase in costs is largely attributed to the rising expenses associated with mechanization and a reduced workforce, a trend that has been ongoing since 2020.
Moreover, supply chain disruptions have played a significant role in the company’s struggles.
The closure of the Suez Canal earlier this year has thrown a wrench into the logistics of Sasini’s fruit business, particularly affecting exports to European markets.
The ripple effects of these disruptions have been felt across the company’s operations, exacerbating an already challenging situation.
Compounding these issues is the severe economic downturn in major economies, notably in the United States.
The ongoing recession has led to a sharp decline in demand for nuts, one of Sasini’s key product lines. This decreased demand, coupled with the disruptions in logistics, has created a challenging environment for the company to navigate.
Sasini’s Board Chairman, James Boyd McFie, acknowledged the challenging global economic environment in a public notice, stating, “The business performance for the period has been adversely affected by several extenuating circumstances in the global macro environment; the global economic situation and continuing geopolitical disruptions in our business value chain being the key factors.”
Adding to Sasini’s woes are recent legislative changes in the coffee sector, which have resulted in further supply chain disruptions.
The company, which trades under the ticker symbol SASN on the Nairobi Securities Exchange (NSE), has seen its stock price slide, closing the previous trading session at Ksh. 17.85—a 10.8pc year-on-year loss.
As Sasini navigates these turbulent waters, the company’s leadership remains focused on adapting to the challenges ahead. However, with global economic uncertainties continuing to cast a shadow, the road to recovery may be long and fraught with challenges.
