Sasini Limited Achieves Profitability Amidst Challenges: Leveraging Production Efficiency and Cost Containment Measures

Published On: January 25, 2024Company: Sasini Limited (SASN.ke)
Question: What strategies did the group employ to remain profitable despite the challenges faced during the year?
Answer: The Group utilized several strategies including leveraging production efficiency, cost containment measures, automation, and returns from other investments. They also plan to establish strategic partnerships for expansion and diversifying their efforts.

Key Insights

  • The Group faced major challenges due to adverse weather conditions during the first half of the year which negatively impacted production volumes, price realizations, and costs of production.
  • The prolonged drought led to significant losses in tea production and affected the Avocado and Coffee units.
  • Global issues such as the recession in the USA and inflationary effects impacted profits, however, the Group leveraged production efficiency, cost containment, automation, and other investments in the second half of the year to achieve positive operational results.
  • A weaker local currency helped the overall results despite an unfavourable business environment.
  • The most profitable units were the Tea, Avocado, and Coffee trading units, while the Coffee estates and the Macadamia units recorded negative results.
  • The Coffee unit faced challenges such as adverse weather, supply chain disruptions, and recession in key markets but still generated profits through the coffee milling, marketing, and trading division.
  • The Tea unit recorded its highest-ever performance, attributed to automation, manufacturing efficiencies, cost leadership, and expansion of the out-grower farmer’s catchment areas.
  • Despite the challenges faced, the Group maintains strong liquidity, supporting business operations.
  • Directors recommend a 50% final dividend payout, amounting to Kes. 114.25 million, payable on 22 March 2024, subject to withholding tax.
  • The management plans to establish strategic partnerships to expand reach and explore new business lines to adapt to the changing business environment.
  • The 72nd Annual General Meeting will be held electronically on Thursday, 7 March 2024 at 11.00 a.m., with formal notice to follow.

Useful links

About Sasini Limited (SASN.ke)

Sasini Limited grows tea and coffee in Kenya and produces, stores and markets bulk tea and coffee for domestic consumption and export to Africa sub-regions. Through wholly-owned subsidiaries, Sasini Limited has interests in the tea, coffee, dairy, livestock, horticulture and tourism sectors in Kenya. Bulk tea produced by Sasini Limited is sold through the Mombasa auction or direct sales to export customers. Tea farms are in the Highlands West of the Rift Valley in Sotik. Bulk coffee is grown on eight independent estates in the Central Highland of Kenya and processed at its own pulping and wet processing facility. Sasini Limited has a coffee mill at Kamundu Coffee Estate which has a daily capacity to mill about 4 800 bags of clean coffee. Aristocrats Tea and Coffee is the exporting arm of Sasini Limited and exports milled coffee to international blending houses and roasters. Loose and tea bag products for the domestic market are sold under the brand names Sasini Gold, Sasini Chai and Sasini Premium. Coffee products for domestic consumption are sold under the brand name Kahawa Bamba and Sasini Instant Coffee. Sasini Limited maintains a herd of Holstein Friesian cattle and produces a range of yoghurt and pasteurised milk. Sasini Limited is listed on the Nairobi Securities Exchange

Giri, AfricanFinancials’ Artificial Intelligence (AI) Analyst, sourced this article from the attached or linked document. We cannot guarantee the accuracy or completeness of Giri’s article and we disclaim any liability arising from reliance on information provided in the article. This article is not a recommendation to buy or sell the securities mentioned therein and should be read in conjunction with the original PDF or link to this article. Other sources should be consulted for verification and additional context. Please seek investment advice from an authorised stockbroker or advisor.

Giri

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