Tea Production in Kenya Company Performance 2016 2017 and longer - PowerPoint PPT Presentation

• Tea Production in Kenya • Company Performance 2016 • 2017 and longer term prospects

WORLD TEA PRODUCTIO:2015&2016 Major Tea Producing Countries-Million Kgs 2500 2000 1500 1000 500 0 China India Kenya Sri Lanka Turkey Vietnam Indonesia Japan Argentina 2015 2230 1191 399 328 230 165 129 82 83 2016 2350 1239 473 292 253 165 126 77 84 2015 2016

others 19% Kenya 27% Vietnam 7% Egypt China India 19% 12% Pakistan Srilanka 16%

Others 14% Pakistan 29% Kazakhstan 2% PAKISTAN Yemen 3% EGYPT UK Russia 4% UAE AFGHANISTAN Sudan 5% SUDAN RUSSIA YEMEN Afghanistan 7% KAZAKHSTAN 0thers Egypt 19% UAE 7% UK 10%

19% increase vs. 2015 '000 tonnes 500 473 445 450 432 399 400 378 370 350 300 250 200 2011 2012 2013 2014 2015 2016 Year

3.50 3.18 2.99 2.98 3.00 21% lower vs. 2015 2.53 2.50 2.36 2.16 2.00 1.50 1.00 2011 2012 2013 2014 2015 2016 2.99 3.18 2.53 2.16 2.98 2.36

4% increase Vs 2015 105 102.29 98.59 100 95 90 88.87 88.08 85 86.13 84.52 80 75 70 65 60 55 11 12 13 14 15 16 Ksh/US$

320 270 18% decrease Vs 2015. 220 170 120 70 11 12 13 14 15 16 266 270 218 190 294 241

• Kenyan production 19% above 2015. • US$ tea prices decreased by 21% from 2015 • Kenyan shilling depreciated by 4% • Price in ksh decreased by 18%.

– Market challenges- instability in key export markets. – Volatility in tea auction prices. – Variability of climatic conditions – Currency fluctuations – Wage inflation and pressure to provide employment

900 800 +3% Vs 2015 700 600 500 400 300 200 100 0 2011 2012 2013 2014 2015 2016 628 651 689 770 692 711

140 120 100 80 60 40 20 0 2011 2012 2013 2014 2015 2016 102.5 116.0 104.2 92.3 122.4 103.9

200 180 160 16%Vs 2015 140 120 100 80 60 40 20 - 2011 2012 2013 2014 2015 2016 163 178 151 120 174 146

40 26%Vs 2015 35 30 25 20 15 10 5 2011 2012 2013 2014 2015 2016 Shs / Kg 23.9 26.9 27.6 26.8 28.9 36.5

Low crop, High Price, Bio Assets Value +99 m 155 145 147 135 125 115 105 95 85 Low crop, High Price 75 Higher crop, Low Price Bio Assets Value gain of Bio Assets Value +22 m 65 13.5M down from 98.5m 60 55 in 2013.(decrease by 85M) 1. Price decline by 45 16% 35 • Higher crop 42 2. Cost increase due • Lower Price to general 25 • Low crop inflation and • Bio Assets • Higher Price 15 higher Electricity Value Loss of 5M costs. 5 8 2 -5 -27 2011 2012 2013 2014 2015 2016

• Crop 3% higher compared to 2015 • Lower US$ prices than 2015 • Decrease in profitability driven by low prices, and increase in cost of sales. • Cost increases remain a cause for concern. – Wages – Electricity – dependence on KPLC • No dividend is recommended for 2016

• 2017 Q1 experienced prolonged drought that adversely impacted on production. • 2017 crop expected to be lower than 2016 • Currency volatility expected • We expect 2017 tea market prices to be in line with long term averages.

• Continued focus on costs management • Continually improve tea quality • Growth – 9.64 ha replanted in 2016 – 12 ha to be replanted in 2017 • Maintenance of Rainforest Alliance certification • Continued focus on employee social welfare.

Continued focus on employees’Safety , Health & Security Improvement in social infrastructure ▪ Maintenance of houses & facilities ▪ Engagement with pupils of Rongai Primary school in LTC on safety & security for boys and girls

2015 May view 2016 May view 2017 May view NTD 12.6Ha (field 65) was planted in 2015 and will fully mature in 2018

THANK YOU TWAWEZA AWARD