Bonface Kanyamwaya, a journalist at TUKO.co.ke, has more than 10 years of financial, economic, business, markets, and aviation expertise, providing insights into Kenya and global trends.

More than five companies have issued profit warnings, signalling economic challenges and a potential financial downturn.

These warnings come as businesses navigate the current economic landscape to try and remain afloat in the markets where they operate.

Kapchorua Tea Kenya is the latest company to indicate that its earnings will drop by at least 25% in the financial year ending March 31, 2025, due to a drop in international tea prices.

“The board of directors of Kapchorua Tea Kenya has informed its shareholders and interested parties that the company’s after-tax earnings for the financial year ending 31 March 2025 are projected to decline by more than 25% of the net earnings reported in the financial year ending 31 March 2024.

“The drop in profit is largely attributed to depressed market prices following an oversupply of tea against demand, as well as a strong Kenyan shilling against the US dollar,” said a notice posted by the firm in a local daily on Tuesday, May 20.

Apart from Kapchorua Tea Kenya, the other firms that have issued cautionary statements are Williamson Tea and Limuru Tea.

Williamson Tea said that its profit for the financial year ending March 31, 2025, will fall by at least 25%.

The firm reported a decline in full-year financial results ending March 31, 2024, from KSh 564.2 million realised a year before to KSh 526.9 million.

On the other hand, earlier this year, Limuru Tea issued a profit warning saying its earnings for the financial year ending December 2024 will be lower by 25% compared to a similar period in 2023.

The notice was issued in compliance with the Capital Markets Authority (CMA) regulations.

Limuru Tea attributed the drop in net earnings to rising operational costs, which have been compounded by escalating labour expenses and difficult market conditions.

The other firms that have issued profit warnings in the last year include Express Kenya PLC, Total Energies Kenya PLC, Kakuzi, WPP Scangroup, Sasini, Bamburi Cement, and Umeme Limited.

Meanwhile, hundreds of jobs have been lost in Kenya in the last six months.

The job losses have been mainly due to high inflation, high interest rates, and global geopolitical developments.

Some companies that have sent workers home or plan significant layoffs include the Postal Corporation of Kenya, Radio Africa Group, and Tala, among others.

Source: TUKO.co.ke