Kapchorua Tea, a prominent Kenyan agricultural plantation company, has announced a significant 27 percent increase in profits, reaching Sh399.4 million (US$3 million) for the fiscal year ending March 2024.

This is a notable rise from Sh314.5 million (US$2.4 million) reported in the previous year.

The profit growth is credited to enhanced production efficiency and a depreciated shilling, despite persistent issues at the Mombasa tea auction.

Revenue from tea sales experienced a substantial boost, climbing to Sh2.19 billion (US$16.98 million) from Sh1.7 billion (US$13.2 million) in the previous year.

Tea production saw a remarkable increase of 44.5 percent, with the total output rising to 8.69 million kilograms from 6.01 million kilograms. This surge in production is primarily due to the recent expansion of Kapchorua’s factory, which has enabled the company to process and buy more green leaf from smallholder farmers.

“The completion of our factory expansion has significantly enhanced our capacity to purchase green leaf from smallholder farmers, resulting in unprecedented crop yields,” Kapchorua noted in their 2024 annual report.

The company’s own tea production grew from 1.73 million kilogrammes to 2.2 million kilogrammes, while purchases from smallholder farmers increased to 6.48 million kilogrammes, up from 4.27 million kilogrammes the previous year.

The expansion of Kapchorua’s factory, which included new withering spaces, processing lines, and expanded sorting and packaging facilities, played a crucial role in achieving these record production levels. 

This additional processing capacity has allowed the firm to handle more green leaf during peak cropping periods, benefiting both the farmers and the company.

Despite these positive developments, Kapchorua sold 7.316 million kilogrammes of tea during the year, leaving 1.375 million kilogrammes unsold. 

The company attributed the unsold quantity to backlogs at the Mombasa tea auction, which has been struggling with oversupply issues.

“The ongoing challenges at the auction, including a high percentage of unsold KTDA teas, have strained the auction system, making it less effective,” the company stated.

Following the impressive results, Kapchorua declared a final dividend of Sh15 (US$0.12) per share, which was distributed on September 2, 2024.