KENYA ORCHARDS' LITTLE DROPS OF PAINS & GAINS.

Compared to other companies quoted on the Nairobi securities exchange, Kenya Orchards Ltd, must be one of the smallest, if not the smallest and so, its gains and pains come in little doses too.

However, so far in 2017, says interim figures to June, released today, August 21 by the exchange, little drops of pain have overwhelmed little gains leaving Kenya Orchards small but significant drop in profit before tax.

The picture of the half year is captured this way: Income grew by little 3.83% to Kes 32.24m but profit before tax declined by 11.3% to N1.72m as little drops of gain gave way to tiny but overwhelming pains.

The pains surfaced from when cost of sale increased by little but higher income growth 4.42% to Kes 29m, followed with 4.35% rise in finance costs to Kes 0.24m.

The gains looked hefty in % terms as administration cost was sliced by 65.5% to Kes 0.19m and establishment expenses dropped by 12.8% to Kes 0.034m but guess what? Selling and distribution costs to grow by 104% to Kes 1.02m.

Sure, all these figures look much like peanuts for many companies on the exchange but their lliputian twists and turns left Kenya Orchards gasping for more profit.

In the end, its gain of Kes 6.25 on every Kes 100 income by June 2016, slipped to Kes 5.33 this year and that's not the way little drops make mighty ocean given years.

One thing though, so long as Kenya Orchards keeps on making profit, no matter how small, it will reducing accumulated losses (down to Kes 46.7m from Kes 50.4m previous June); growing its working capital (Kes 25.7m from Kes 22.15m) and so, making easier and easier to stay afloat.

But that's the point: Profit dropping in double digit as income grows in single digit does not head in that direction for long, little by little the pains overwhelm  the gains till profit is no more.

So, Kenya Orchards has to do something especially to check the growth in distribution and selling costs and keep a good lid on cost of sales.

KENYA ORCHARDS LTD Kes m, half yr
                         ..            2017.        2016
Revenue.                     32.24.         31.05
Cost of sale.               29.03.         27.05
Gross profit.                 3.21.           3.26
Administration.            0.19.           0.55
Selling & Distribution. 1.02.           0.50
Establishment cost     0.034.        0.039
Finance cost.               0.24.           0.23
Profit before tax.         1.72.           1.94
Profit margin %.          5.33.            6.25
Accumulated losses 46.7.            50.4
Working capital.        25.7.             22.15

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