Geopolitical Tensions, Adverse Weather, and Forex Fluctuations Impact Kakuzi Trading Results -

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…as mitigation strategies are activated to reduce the impact of logistical challenges by adapting to longer delivery lead times.

Adverse weather conditions, foreign currency fluctuations, and geopolitical tensions in the Middle East created a challenging trading environment for Kakuzi Plc (NSE: KUKZ) last year, leading to a pre-tax loss of Ksh 167 million, the company has announced.

Impact on Avocado Exports and Other Operations

Speaking during the financial results release, Kakuzi Plc Managing Director Chris Flowers noted that the alternative shipping route from Kilindini, around the Cape of Good Hope in South Africa, adds two extra weeks to delivery times, significantly impacting fruit quality upon arrival in Europe.

He confirmed that Kakuzi’s avocado profits decreased to Ksh 361 million, a sharp decline from Ksh 1.37 billion posted the previous year. Adverse weather conditions in 2024 led to a reduction in avocado yields, with total exports dropping to 2,222,244 cartons, down from 3,074,105 cartons exported in 2023.

Despite the challenges in avocado exports, Kakuzi’s macadamia operations recorded a pre-tax profit of Ksh 69 million, recovering from a Ksh 354 million loss in the previous year. The company’s Forestry and Livestock divisions also reported positive growth, reinforcing its ongoing diversification strategy:

Forestry unit profits soared to Ksh 288 million, up from Ksh 149 million in 2023.
Livestock unit profits reached Ksh 31 million, recovering from a Ksh 13 million loss in 2023.

Flowers attributed the overall decline in avocado production to excessive rainfall in early 2024, which caused waterlogging and hampered fruit production. Consequently, fruit volumes for both Hass and Pinkerton avocados decreased by 23% and 19%, respectively.

He added, “The Kenya Shilling strengthened by 15% against the Euro, averaging Ksh 140 during the avocado export season, compared to Ksh 162 in the previous year, leading to lower Shilling revenues.”

Mitigation Strategies and Future Outlook

To counter logistical challenges, Kakuzi has activated mitigation strategies by adapting to longer delivery lead times. Flowers stated: “While we hope that the geopolitical tensions in the Middle East will ease, we must plan for continued rerouted logistics in 2025. Kakuzi remains committed to delivering high-quality products to our customers.”

On expanding market opportunities, Kakuzi PLC Chairman Nicholas Ng’ang’a emphasized the need to reduce dependence on European markets. He urged both public and private stakeholders in Kenya’s avocado sector to explore high-value new markets, noting that while China and India hold potential, their demand remains relatively low compared to Europe.

He pointed out that:

The USA consumed 1.3 million metric tonnes of avocados in 2024, compared to 0.9 million metric tonnes in Europe.
Over 80% of the USA’s avocados were sourced from Mexico.
The North American market presents a major opportunity for Kenyan avocado exports.

Leveraging AgTech for Future Growth

Ng’ang’a emphasized that Kakuzi will continue leveraging Agricultural Technology (AgTech) to maximize yields. He noted that the firm is observing the rapid adoption of Artificial Intelligence (AI) and autonomous agricultural vehicles—such as drones—being used globally for efficient farming practices.

Kakuzi remains committed to navigating industry challenges while pursuing new opportunities for growth and sustainability in 2025 and beyond.