Supply issues squeeze Comvita profit
Comvita, the world's biggest manufacturer and marketer of New Zealand's unique manuka honey, has reported a 7.4 per cent drop in interim profit due to supply issues and continuing tough trading in non-Asian countries.
The NZX-listed company has reported net profit for the six months to September 30 of $2.38 million, down from $2.57m for the same period last year. Sales rose 8.7 per cent to $45.4m compared with $41.8m last year.
The company said that the first six months of the trading year were its quieter period. Sales and earnings growth during the period were constrained by the short supply of its key ingredient, manuka honey. Chairman Neil Craig said the honey crop from last summer was "well below average" due to poor weather which resulted in a sharp increase in the purchase price.
The company continues to increase its manuka honey volumes under direct ownership in order to secure long-term supply requirements while also mitigating for sharp price changes year to year, he said.
Trading activity had been especially strong in China, South Korea and Hong Kong. Craig said second half year sales and profits were historically significantly stronger than the first half. "We expect this to be the case again this financial year as Asian sales continue to grow strongly,’’ he said.
"The growth of our business year to date in our key Asian markets is especially pleasing and this will be fully reflected over the coming months as we enter the peak season in these Northern Hemisphere countries."
Craig said the company is confident the company will deliver an increase in earnings for the full year. Net profit for the full year ending March was $8.22m on sales of $95.9m.
The company has found trading difficult in non-Asian markets such as Australia and the UK where it sells through third party retail chains. "The general downturn in the economy and consumer confidence in these markets in particular is resulting in an increasingly competitive environment for our retailer customers," said Craig.
Comvita will pay an interim dividend of 4 cents a share for the first half of the year which will be paid on December 21. The dividend reinvestment plan will not apply.
The share price remained unchanged at $3.70 a share mid-morning.