Future looking sweeter for honey exporter

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New Zealand’s biggest ma¯nuka honey exporter and former higher flier, Comvita, said it had turned itself around despite two unusually poor harvests in a row.

The company reported a net profit after tax for the June year $8.2 million — towards the bottom end of its own $8-$10m guidance — compared with net profit of $9.8m in 2017.

After adjusting for non-operating items, the result is an after tax operating profit of $9.3m, against a operating after tax loss of $5.5m in 2017.

The second poor honey harvest had a negative impact of $6.2m on the full year’s net profit.

Comvita rode the crest of a wave in 2014 and 2015 based on enthusiasm for ma¯nuka honey and strong demand through the unofficial “grey”, or daigou, trade channels into China.

The share price peaked at $12.85 in mid 2016 but quickly began to peel off when it hit regulatory problems in the daigou markets the following year. Then came a poor, weatheraffected season, followed by an equally poor one in the season just past.

The company’s share price has struggled to perform since the giddy heights in 2016, and traded yesterday at $5.65, down five cents from Monday’s close.

Chairman Neil Craig said the history of honey harvests in New Zealand showed that a third, consecutive, poor honey season was unlikely.

“However, we are in the process of continuing to evolve the operating model of our Apiary business to reduce the financial exposure in the event of another poor harvest,” he said in a statement.

Sales for the period of $176.7m were up by 19 per cent, and included a solid rebound of “grey channel” sales in Australasia of 58 per cent.

Market demand in key Asian and North American markets continues to grow, the company said.

Significant investment in acquiring raw honey inventory during the last quarter places Comvita in a good position to meet future market demand, it said.

“Ordinarily you would not want a manufacturer to increase inventories because they are expensive to warehouse and they tie up capital that could be used elsewhere,” Shareclarity managing director Daniel Kieser said. “In this case, however, it may be okay because honey does not degrade and could provide capacity if sales were to increase next year,” Kieser said.

Comvita declared a final dividend of 2 cents per share, bringing the total to 6 cents, or 29 per cent of its operating profit after tax.