Comvitas share price surges after reporting near 200% turnaround in profit

Global manuka honey supplier Comvita is resuming its dividend payment after posting a near 200 per cent turnaround to make a net profit of nearly $10 million for the 2021 financial year.

The Bay of Plenty exporter, based at Paengaroa, has completed an 18-month transformation programme and is producing sales growth, particularly in its main markets of China and North America.

Comvita chief executive David Banfield said the results show “we have come a long way to stabilise performance. Not only have we returned to profitability, we have also significantly simplified the business to set up Comvita for long-term profitable growth.”

The transformation programme delivered $12.1m in improvements, and the annual result was in line with market expectation.

Comvita’s share price surged 28c or 8.19 per cent to $3.70 in early trading on the NZX market.

For the year ending June, Comvita struck a net profit of $9.47m compared with a loss of $9.7m in 2020 – a turnaround of 197.7 per cent. Its revenue was slightly down by 2.1 per cent to $191.73m.

Operating earnings (ebitda) soared $21.3m or 511 per cent to $25.5m, and Comvita is paying a final dividend of 4c a share on October 7 – representing 30 per cent of the net profit.

Comvita has set an ebitda guidance of $27m-$30m for the 2022 financial year, with digital sales increasing from 34 per cent to 38 per cent of total revenue. It will also further reduce its inventory from $100m to $90m.

Greater China is by far Comvita’s biggest market for manuka honey, propolis and other bee products. Sales there increased 7 per cent to $93.1m compared with $86.9m in 2020.

In North America, sales rose 12 per from $22.1m to $24.7m; and in Korea, Japan and South East Asia sales were up 23 per cent from $20.5m to $25.3m. The revenue from Australia and New Zealand slipped 27 per cent from $44m to $32.4m.

Australia and New Zealand revenue increased 17 per cent in the fourth quarter compared with the previous corresponding period and 33 per cent compared with the third quarter.

Banfield said Comvita was encouraged by its performance in the focus growth markets of China, the world’s biggest honey market, and North America.

“In local currency, China sales increased by 31 per cent, with strong performance delivered across all channels. Comvita remains the clear brand and market leader in China, and is the fastest growing Manuka honey brand in North America,” he said.

Marketing investment increased y 139 per cent in China and more than 80 per cent in North America.

Comvita’s total harvest for the 2021 financial year fell from 700 tonnes to 370 tonnes, caused by unsettled weather.

Banfield said despite the harvest being below average, the quality and control of costs meant that the harvest delivered a small contribution to group profits. There was good availability for the 2022 financial year.

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