Kenya tea firms' yearly earnings hit by rising costs

Reuters, Monday 20 Jun 2011

Fluctuation in local currency will also affect the companies earnings

Kenya tea grower Kapchorua full-year profit halved due to rising costs while Williamson's rose by 9 per cent buoyed largely by property valuations, the firms said on Monday.

Kapchorua blamed rising production costs for the sharp decline of it's operating profit for the year to the end of March to 63.5 million shillings, while Williamson said production costs and a weak crop weighed on its earnings.

An increase in property valuations helped lift profits for Williamson despite a poor crop, the company said.

Both firms have a common shareholder.

Kapchorua declared a dividend of 7.50 shillings, up from 6.25 shillings, while Williamson will pay a dividend of 12.50 shillings from 6.25 shillings.

The two firms said weather conditions were unpredictable, and the company's earnings could also be affected by rising production costs and foreign exchange fluctuations that have seen the local currency weaken in recent weeks.

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