NSE-listed Limuru Tea Plc has issued its third straight profit warning, marking the fifth alert in the past decade and joining a growing list of at least 12 companies on the Nairobi Securities Exchange that have cautioned investors about weaker earnings over the last year.
The tea producer cited escalating labour and operating expenses, compounded by subdued prices at the Mombasa Tea Auction, as the principal drivers behind the expected downturn.
The latest caution follows similar warnings for the 2023 and 2024 financial years, extending a run that also saw alerts in 2021 and 2017. Over the past ten years, the company’s performance has oscillated between slim profits and losses, with four loss-making years in the last eight and no durable earnings rebound.
Data from the Tea Board of Kenya illustrates the broader industry pressures. Average auction prices reached USD 2.19 per kilo in 2024, or roughly KSh 295.75, compared with USD 2.15 and KSh 277.82 in 2023. Although dollar prices ticked up marginally, monthly rates were volatile, slipping to USD 2.07 in September and hovering between USD 2.10 and USD 2.18 for much of the year.
Meanwhile, volumes increased. National auction sales rose to 396,370 tonnes in 2024 from 361,170 tonnes a year earlier, while production climbed sharply to 598,478 tonnes from 499,660 tonnes. That surge in supply, set against uneven global demand, has tempered price recovery and squeezed margins across the sector.
For smaller estates such as Limuru Tea, operating in a price-taker environment, even slight movements in auction prices can have an outsized impact on profitability. Rising wage bills and input costs feed directly into the bottom line, leaving little room to manoeuvre.
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The warning lands amid a wider spate of earnings alerts across the exchange, spanning financial services, utilities, airlines and agricultural exporters. As extraordinary gains fade and cost pressures linger, the market is turning its gaze toward balance sheet strength and the capacity of smaller counters to weather cyclical shocks without lurching from profit to loss yet again.
