Comvita lifts 2018 earnings outlook on 'grey market' recovery
By Rebecca Howard
Oct. 18 (BusinessDesk) - Comvita raised its 2018 earnings outlook after a solid recovery of the so-called "grey channel" into China and significant North American sales, chief executive Scott Coulter said in a presentation for the annual general meeting.
The Te Puke-based company's first-quarter sales rose 35 percent from a year earlier and were tracking ahead of budget, giving Comvita "confidence in a profit greater than $17.1 million," according to the annual general meeting presentation. It reiterated an expectation to resume dividend payments in the current financial year.
In August, Comvita projected operating earnings of at least $17.1 million in the year ending June 30 matching its 2016 result.
The grey channel is made up of small-scale exporters who buy the product and post it to China. Moves by the Chinese government to crack down on grey or "daigou" sales had crimped profits for companies such as Comvita.
The honey products maker's improved guidance is contingent on the channel continuing to recover and on a return to a "normal" honey season as well as growth in the North American and South East Asian markets and Chinese joint venture contributing to future profitability, said Coulter.
The China joint venture became operational on July 1 and is focused on e-commerce, expanding stand-alone stores in Shanghai, Beijing and Chengdu as well as actively managing 45 wholesales who cover part of China the company can't reach, according to the AGM presentation.
The stock recently rose 0.8 percent to $7.54 and has shed 6.9 percent this year.