Favourable international prices for tea and coffee lifted Sasini Limited to post a Sh1.3 billion profit for the year ended September 30th 2008.
This was a contrast to the Sh71 million loss the firm posted for the same period last year.
According to the audited financial results signed by the company secretary Mrs M.R Ekaya, the profits were significantly boosted by fair value of biological assets that contributed Sh889 million.
“However, these gains are unavailable for distribution and have been credited to the biological assets fair value reserves” the statement said explaining the company’s failure to declare dividends to its shareholders.
The company’s profits increased despite substantial decline in production of coffee and tea attributed to post-election crisis and below average short rains during the year.
“The increase in revenue was mainly due to much stronger international tea and coffee prices and favourable exchange rate.” the statement said.
However, the high tea prices impacted negatively on the performance of value added retail products.
This, coupled with Savanna coffee lounges being at gestation period meant the company ended the year with net loss from operating costs of Sh13.4 million compared to Sh31 million in 2007.
The company, whose core business is agriculture, said high production costs contributed by high fuel costs, electricity costs, fertilizers were beyond the control of the management.
Other factors that the company has to grapple with were adverse weather, international commodity prices and foreign exchange.
“In order to mitigate against these factors and to reduce dependence on trading in tea and coffee operations, the Group continues to pursue diversification strategy as laid down in vision 2012.”
The company said the funds raised through corporate bond have been utilised to enhance retail export operations, expand coffee lounges and coffee milling operations.
However, the financial costs of raising funds through bond issue dented to company’s profits for the year by Sh61 million.
According to the management, the returns from these investments will be realised in a few years.