Comvita stockpiles as market softens
Honey exporter Comvita has posted an improved profit as it recovers from two poor honey seasons, a soft market, and the reclassification of ma¯ nuka.
While a shortage might normally result in higher prices, the combination of events has seen the value of all honey varieties fall over the past year.
Comvita chief executive Scott Coulter said the company had increased its debt by buying stockpiles of honey to support beekeepers and stabilise prices, and ensure future supply.
Although it was impossible to predict the coming season, Coulter said ‘‘we’re due for a good one’’.
‘‘Like a good wine, ma¯ nuka honey increases in value over time when stored correctly,’’ Coulter said.
The biggest issue for Comvita over the past year was the move by the Ministry for Primary Industries (MPI) to redefine ma¯ nuka honey.
Under the new rules, all exporters must provide test results from an independent laboratory confirming their product meets the MPI definition – known as UMF or ‘‘unique factor ma¯ nuka’’. Export certification will not be issued without it.
‘‘While the new MPI standards have increased testing and compliance costs, this is excellent for the future of the industry,’’ Coulter said.
‘‘After two poor collecting seasons we’ve invested heavily in buying safety stocks of UMF ma¯ nuka honey, which is why inventories grew to $89 million from $58m . . . rather than relying on a normal honey season.’’
Buying the additional honey stocks lifted Comvita’s debt from $66m to $96m but Coulter said there was still $25m of ‘‘headroom’’ for developments.
Comvita was upgrading its honey production facility at Paengaroa in the Bay of Plenty at a cost of $12m. The upgrade, which is due for completion next year, included a photovoltaic solarenergy system capable of generating 370,000 kilowatts of power, which is equal to 53 households’ consumption.
‘‘This will provide us the ability to store virtually all of our raw materials at Paengaroa in a purpose-built, state-ofthe-art, climate-controlled warehouse.’’
Comvita had invested heavily in breeding programmes and had several ma¯nuka crosses that produce higher levels of UMF properties. It had set up 12 seed nurseries in different areas and was growing large-scale plantations.
To show the effect of the the poor honey collecting season last summer, Comvita revealed the financial results of the beekeeping apiary business separately from the its honey sales.
Instead of delivering a $4.5m profit, the beekeeping divisions posted a $6.2m after-tax loss. By contrast the honey sales provided a $15.5m profit.
The two results combined gave the final after-tax profit of $9.3m after some one-off accounting items. This was short of the forecast $17.1m profit, but well ahead of last year’s $5.5m loss.
Coulter said the profit was driven by strong growth in UMF demand in Australia, the United Kingdom, Hong Kong, Korea, Japan and the United States.
UMF sales were up 54 per cent and sales of all honey were up 19 per cent.
The company’s North American sales hit $26m, while European sales were up 17 per cent to $8.7m. Comvita was aiming to lift UK and EU sales to balance its $46m in sales to China.
Australian sales grew 43 per cent to $45m and New Zealand sales grew 12 per cent to $37m.
The company will pay a lower dividend of about 30 per cent of profit rather than 45 per cent, taking the final payout to 6 cents a share.