Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Comvita warns annual earnings to slump on weak honey harvest

Comvita warns annual earnings to slump on weak honey harvest, slow China sales

By Paul McBeth

Jan. 23 (BusinessDesk) - Comvita shares sank 14 percent after the manuka honey products maker warned annual earnings will tumble by about two-thirds as the nation's unseasonably wet and windy weather saps the honey harvest and slow sales via China's informal trading channels.

Te Puke-based Comvita expects after-tax operating earnings of between $5 million and $7 million in the year ending June 30, having previously predicted it would be in line with 2016's earnings of $17.1 million. However, the company's sale of its Medihoney brand and shareholding in Derma Sciences will bolster the bottom line, with net profit expected to be between $20 million and $22 million.

The shares dropped $1.06 to $6.77, the lowest they've been since November 2015.

"Unfortunately these wet, cold, and particularly windy conditions have significantly impacted the production of this season's honey, which in turn has impacted our ability to deliver on our 2017 financial forecast," chairman Neil Craig said in a statement. "We also indicated for the first four months of the year, we had experienced tough trading conditions, with sales significantly lower than the prior year resulting from a slowdown in the New Zealand and Australian informal trade channels into China."

In October Comvita warned it was likely to report a first-half loss due to the crackdown by Chinese authorities on grey market traders, which has also hit other industries that use those distribution channels such infant formula makers.

Comvita chief executive Scott Coulter said outside the grey market into China, the company's sales were strong across all other markets. He said the honey products maker was keeping a lid on costs, "which enables us to maintain confidence to deliver on our longer term objectives", and has previously said it laid off 23 staff from head office.

The company expects a honey crop of 380 tonnes in the 2017 year, compared to an average harvest of 974 tonnes.

Coulter said Comvita had been preparing for this type of scenario, buying Manuka honey inventory from third party suppliers over the past 18 months, which gives it enough supply to meet demand for the next year.

"The very poor honey production this season reinforces the importance of being successful in our diversification and value add strategies," he said. "This is an active ongoing process about which we expect to release more details over the next few months."

(BusinessDesk)

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 


Reserve Bank: A least regrets approach to uncertainty

The Reserve Bank of New Zealand – Te Pūtea Matua makes decisions about official interest rates in a way that is robust in the face of uncertainty about the economy, Reserve Bank Assistant Governor Christian Hawkesby says in a speech published today*... More>>




Shocking Stuff: Lower Income Areas Paying More For Power

Analysis from Consumer NZ and Powerswitch has found major differences in electricity pricing depending on where you live, with those in lower income areas being hit the hardest... More>>



Science Media Centre: Understanding DDoS cyber attacks – Expert Reaction

Cyber attacks have hit several New Zealand organisations this month, disrupting their online services. The Distributed Denial of Service (DDoS) attacks were the same kind of cyber attack that affected the NZX around this time last year... More>>



Statistics: GDP rises in the June 2021 quarter

Gross domestic product (GDP) rose by 2.8 percent in the June 2021 quarter, following a 1.4 percent increase in the March 2021 quarter, Stats NZ said today. June 2021 quarter GDP was 4.3 percent higher when compared with the December 2019 quarter... More>>


Energy-from-waste: $350 Million Plant To Deliver Renewable Energy Considered

Investigations have begun into the viability of building an Energy-from-Waste plant that will safely convert 350,000 tonnes of waste, that would otherwise be dumped into South Island landfills annually, into renewable electricity... More>>

Olam: Confirms plans for commissioning of NZ dairy plant

OFI, a global leader in natural and sustainable food ingredient solutions, today confirmed plans to develop a new dairy processing facility at Tokoroa. It is now taking expressions of interest from potential farmer suppliers, employees, contractors, and general trade suppliers... More>>