By Duncan Miriri
NAIROBI, June 25 (Reuters) - Kenya's Williamson Tea and Kapchorua Tea said declining markets and rising fuel and energy costs will make it difficult this year to replicate the profits each reported to the bourse on Friday.
While Williamson's pretax rose to 1.22 billion shillings ($15.05 million) from 145.34 million shillings in the year ago period, Kapchorua doubled its profit to 199.54 million shillings, both firms said in a note to the stock exchange.
'We do not anticipate a repeat of the year just ended,' the firms said in the note. 'Whilst weather conditions remain favourable, markets have declined, which will negatively impact on performance and profitability as costs continue to rise.'
Although Kapchorua and Williamson are listed separately, they share the same board of directors.
The board recommended a dividend of 6.25 shillings for every share in Williamson, up from 4.00 shillings a year ago. Each share in Kapchorua will receive the same amount in dividend, higher than last year's 2.50 shillings.
Aly Khan Satchu, an independent analyst said the proposed dividend for Williamson's shares did not meet expectations. 'The dividend pay out of 6.25 per share was a 'crass' mistake for which there is simply no justification,' he said.
He cited Williamson's earnings per share of 96.42 shillings from 12.62 shillings previously for his dissatisfaction with the proposed dividend.
The directors of both firms attributed the year's performance to good weather conditions during the period under review, adding that costs were advancing.
'Production costs continue to increase due to wage increments, power and fuel costs as well as inflation,' they said in the statement to the bourse.
Shares of agricultural firms made strong gains at the Nairobi bourse in the last quarter of 2009 and the first months of this year on the back of expectations production would rise due to good rains.
Tea prices also rose significantly for most of last year due to a drought that cut output in the major producers. The price of the top tea grade hit a record of $5.45 last year at auction.
(Editing by Mike Nesbit) ($1=81.05 Kenyan shillings) (For more Reuters Africa coverage and to have your say on the top issues, visit; http://af.reuters.com/) Keywords: KAPCHORUA WILLIAMSON/ (Email: nairobi.newsroom@reuters.com; Tel: +254 20 222 4717) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NAIROBI, June 25 (Reuters) - Kenya's Williamson Tea and Kapchorua Tea said declining markets and rising fuel and energy costs will make it difficult this year to replicate the profits each reported to the bourse on Friday.
While Williamson's pretax rose to 1.22 billion shillings ($15.05 million) from 145.34 million shillings in the year ago period, Kapchorua doubled its profit to 199.54 million shillings, both firms said in a note to the stock exchange.
'We do not anticipate a repeat of the year just ended,' the firms said in the note. 'Whilst weather conditions remain favourable, markets have declined, which will negatively impact on performance and profitability as costs continue to rise.'
Although Kapchorua and Williamson are listed separately, they share the same board of directors.
The board recommended a dividend of 6.25 shillings for every share in Williamson, up from 4.00 shillings a year ago. Each share in Kapchorua will receive the same amount in dividend, higher than last year's 2.50 shillings.
Aly Khan Satchu, an independent analyst said the proposed dividend for Williamson's shares did not meet expectations. 'The dividend pay out of 6.25 per share was a 'crass' mistake for which there is simply no justification,' he said.
He cited Williamson's earnings per share of 96.42 shillings from 12.62 shillings previously for his dissatisfaction with the proposed dividend.
The directors of both firms attributed the year's performance to good weather conditions during the period under review, adding that costs were advancing.
'Production costs continue to increase due to wage increments, power and fuel costs as well as inflation,' they said in the statement to the bourse.
Shares of agricultural firms made strong gains at the Nairobi bourse in the last quarter of 2009 and the first months of this year on the back of expectations production would rise due to good rains.
Tea prices also rose significantly for most of last year due to a drought that cut output in the major producers. The price of the top tea grade hit a record of $5.45 last year at auction.
(Editing by Mike Nesbit) ($1=81.05 Kenyan shillings) (For more Reuters Africa coverage and to have your say on the top issues, visit; http://af.reuters.com/) Keywords: KAPCHORUA WILLIAMSON/ (Email: nairobi.newsroom@reuters.com; Tel: +254 20 222 4717) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.