Tea grower Sasini Limited registered a massive 101% growth in pre-tax profits rising from Ksh236 mn (US$3.1 mn) to Ksh473 mn (US$6.1 mn). The company’s operations include the growing and processing of tea and coffee as well as dairy operations, commercial milking and marketing of coffee, renting of growing land and value addition of related products. The management attributed the performance to an increase in prices realized for tea and coffee and a favourable exchange rate that helped reap better earnings from the high international tea prices. Among the company’s future plans is a significant investment in doubling its coffee milling capacity as well as the opening of more “Savanna” coffee lounges.

The company’s revenues grew 29% during the period to Ksh1.3 bn (US$17.1 mn) while profit from operations grew 91% to Ksh495 mn (US$6.4 mn). According to the Coffee Board of Kenya the price per Metric Tonne (MT) for coffee sales aboard has risen 145% y-o-y to January 2010 from $2.01 per MT to $4.92 per MT. Based on 12 month rolling figures coffee export sales prices have risen 38% y-o-y to January 2010 while coffee output sold has risen 19% to 4,069 MT. The management cautioned that while high tea prices boosted their agricultural operations they stunted the growth in value added retail products. Many experts expect crop prices to declines as output rises following the onset of heavy rains in the country.

The tea grower performance was good as they recorded gains in both earnings from normal operations as well as gains from the revaluation of their biological assets. Profits from fair value changes in their biological assets declined by 25% during the period to Ksh58 mn (US$0.7 mn), however, profits arising from operating activities rose a massive 213% Ksh247 mn (US$3.2 mn). The performance gave the management the confidence to announce a Ksh0.20 per share interim dividend particularly since the half year EPS is up 95%. Last year the company saw its EPS drop 40% from Ksh3.84 per share to Ksh2.31 per share on account of less favourable revaluation of bio assets and the management proposed total dividends totaling Ksh0.40 per share. The company currently has a market value of Ksh3.5 bn (US$45 mn) and has a respective PE, PBV and P/S of 6.6x, 0.6x and 1.6x respectively.