Comvita half year result slides
Comvita has blamed the seasonal nature of its sales for forecasting a likely loss of $1 million for the six months to September 30, compared with a net profit of $2.4m in the previous half-year.
The natural health and beauty company's chief executive, Brett Hewlett, put the contrast down to the impact of a large northern hemisphere customer base that traditionally buys Comvita products seasonally.
"Comvita has historically had a year of two profit halves, with the second half-year sales and earnings stronger than the first half due to many of our product lines primarily being consumed in the northern hemisphere winter months," he said.
"This effect is compounded by Asian tourists purchasing our products in New Zealand and Australia during the peak tourism season in our own summer.
"As we grow our retail infrastructure in Asia and with the Australian market continuing to be quite soft, this year-of-two-halves effect is becoming more pronounced."
Hewlett said shareholders should not be too concerned by the $2m dip in sales between the two six-month periods as this also reflected the seasonal nature of the company's product line.
"For this financial year ended March 31, 2014, we expect in excess of 60 per cent of our total sales to be in the second half of the year," he said.
"Further, we necessarily carry an overhead and marketing cost structure in place for the full year, which negatively impacts our first-half earnings."
Comvita's net profit after tax for the year ending March 31, 2013, was $7.4m on sales of $103.5m, and Hewlett said he remained confident that the current year would beat those numbers.
Comvita was able to exploit a misleading-labelling issue with competitors in its British manuka honey products line, and sales improved there after it entered agreements with major retailers Tesco, Costco and Boots.
However, in the company's Hong Kong market it needed to launch a consumer awareness campaign after sales took a hit because "recent food-security issues have heightened consumers' scrutiny of all imported food products from New Zealand".
Hewlett said that despite the half-year profit dip, which would be confirmed next month, the outlook remained positive for the honey and olive products company.
"We are targeting a better financial result than 2013 while continuing with our strategic initiatives of increased control over raw material supply and introducing new systems to support our growth in Asia," he said.
- © Fairfax NZ News