Agricultural firm Sasini #ticker:SASN sunk into a net loss of Sh337.7 million in the year ended September on the back of lower sales, a move that saw the company suspend dividends.
The Nairobi Securities Exchange-listed firm had made a net profit of Sh293.5 million the year before.
Sasini, which had paid an interim dividend of Sh0.5 on July 16, said it would break its custom of making a second payout to shareholders.
“The directors do not recommend the payment of a final dividend,” Sasini said in a statement.
The company’s sales declined 20 percent to Sh2.7 billion in the review period compared to Sh3.5 billion a year earlier. Sasini reduced its costs but at a pace that was inadequate to compensate for the lower turnover. Its cost of sales, for instance, dropped 11 percent to Sh2.4 billion. The sales decline was the result of lower prices of tea and coffee.
“The prices were lower than the cost of production throughout the financial year, leading to the absorption of cash reserves to support the continuation of the business,” Sasini said.
The company’s cash and bank balances dropped to Sh429.2 million from Sh1.1 billion. The firm’s decision to suspend dividends is seen as a move to conserve cash amid in the challenging business environment.
At Sh0.5 per share, the final dividend would have cost it Sh114 million.
“Our expectation for the year’s performance was severely affected by the significant dip in the tea and coffee prices experienced during the year,” Sasini said.
Tea and coffee prices have been on a downward trend in the last year in what has been attributed to a glut in the market.