Branded mac nut goods help Royal Hawai­ian turn a profit

Honolulu Star-Advertiser - - BUSINESS - By An­drew Gomes agomes@starad­ver­

An ear­lier start to the fall macadamia nut har­vest helped Hawaii’s largest pro­ducer of the crop turn a profit in the third quar­ter com­pared with a loss a year ago. Royal Hawai­ian Or­chards LP earned $161,000 in the three-month pe­riod ended Sept. 30, up from a $17,000 loss a year ear­lier, ac­cord­ing to a fi­nan­cial re­port filed Tues­day with the U.S. Se­cu­ri­ties and Ex­change Com­mis­sion. The Hilo-based com­pany, which farms about 5,400 acres of macadamia trees on Hawaii is­land, re­al­ized its bot­tom-line turn­around while rev­enue slipped 21 per­cent to $6 mil­lion in the re­cent quar­ter from $7.6 mil­lion a year ear­lier. Royal Hawai­ian had lower rev­enue be­cause it sold far fewer pro­cessed nuts in bulk to whole­sale pur­chasers. On an­other hand, the com­pany sold more un­pro­cessed nuts in bulk and more branded snack prod­ucts that it makes for sale in re­tail stores us­ing much of its crop.

“Our em­pha­sis on sell­ing branded macadamia nut prod­ucts ver­sus sell­ing bulk macadamia nuts is ad­justed based on the rel­a­tive prof­itabil­ity and cash flow pro­vided by the re­spec­tive chan­nels,” the com­pany said in the re­port.

Dur­ing the sec­ond quar­ter, Royal Hawai­ian said it had re­duced the va­ri­ety of its branded prod­ucts avail­able in stores and was look­ing at re­duc­ing the num­ber and types of re­tail chan­nels for those prod­ucts. But in the third quar­ter, sales rev­enue for branded prod­ucts dou­bled to $2.6 mil­lion from $1.3 mil­lion in last year’s third quar­ter.

Royal Hawai­ian be­gan mak­ing pack­aged snacks in 2012 with a goal of earn­ing a big­ger re­turn on its crop, which his­tor­i­cally was sold only raw in bulk, pri­mar­ily to snack maker Mauna Loa Macadamia Nut Corp. Ini­tially, Royal Hawai­ian de­vel­oped a dozen va­ri­eties of fla­vored nuts and frui­tand-nut clus­ters. That was fol­lowed with dark-choco­late-cov­ered macadamias in 2015 and then macadamia but­ter and milk last year. Mauna Loa is still a sub­stan­tial buyer of un­pro­cessed mac nuts from Royal Hawai­ian, which sold 18 per­cent of its crop last year to Mauna Loa. Part­ner­ship shares in Royal Hawai­ian — which typ­i­cally trade lightly on an over-the­counter stock ex­change and are mainly held by Den­ver in­vestor and for­mer Quark Soft­ware Inc. CEO Farhad “Fred” Ebrahimi — most re­cently traded on Mon­day and closed at $2.12. Over the last 52 weeks, Royal Hawai­ian shares have closed be­tween a $3.01 high on Dec. 16 and a $1.80 low on May 4.

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