Agricultural firm Sasini has increased dividend payout by 50 percent to Sh342.1 million despite the net profit more than halving to Sh542.6 million in the financial year ended September 2023.
The board announced Monday it has recommended a final dividend of Sh0.50 per share amounting to Sh114.25 million to add to the Sh1 per share interim dividend or a total of Sh228.06 million that had been paid early July last year.
The final dividend will be paid on or about March to investors who will be in Sasini’s share register at the close of business on February 22.
The firm’s top three shareholders are Legend Investments Limited (41.84 percent), Yana Towers Limited (12.6 percent) and East Africa Batteries Limited with an 11.02 percent stake.
Sasini’s net profit retreated from a seven-year high of Sh1.17 billion, marking a 53.6 percent decline in the review period the management described as “extremely challenging” due to adverse weather conditions, especially in the first half of the year.
“The effect on the business was drastic in all units as manifested in lower production volumes, lower price realisations and higher costs of production,” said the board.
“The prolonged drought in the first half of the financial year resulted in a substantial loss in tea production that also manifested in the avocado and coffee units adversely impacting production volumes.”
Revenue fell by 22 percent to Sh5.72 billion while administration and establishment expenses from Sh997.7 million to Sh1 billion, cutting the bottom line. Finance costs also nearly doubled to Sh55.65 million from Sh28.25 million.
Sasini said the drop in production was coupled with a significant fall in global coffee prices, the total collapse of the macadamia market occasioned by recession in the main market -the US, the delay in the opening of the avocado export season in Kenya due to late maturing of fruits, and the inflationary effects of doing business.
“As a result of the multiple shocks and economic uncertainties aggravated by the effects of climate change, some of the business units were more adversely affected than others. Only the tea, avocado, and coffee trading units were profitable. The coffee estates and the macadamia units recorded negative results,” said the firm.
However, the Nairobi Securities Exchange-listed firm said the tea business unit achieved the highest-ever registered performance over the history of the business from operating activities despite the adverse weather conditions early in the year.
Sasini said the cumulative effects of automation of processes in the fields, manufacturing efficiencies, cost leadership, and expansion of the out-grower farmer's catchment areas contributed to the profitability of the tea business.
“Given the lower-than-expected performance during the year, the management will continue to seek and establish strategic partnerships to expand our reach and explore new lines and ideas in a bid to fit in with the changing business environment to expand and enhance shareholder value,” said the board on the outlook.