Comvita flags 15% fall in FY profit as costly honey, shortages prompt downgrade
Comvita, which produces health products from manuka honey and olive leaves, expects a 15 percent fall in annual profit because of expensive honey, supply shortages and tough trading conditions in Britain and Australia.
The Te Puke-based company expects a net profit of $7 million in the year ending March 31, down from $8.2 million a year earlier which it had been expecting to beat, Comvita says in a statement. Sales are forecast to rise 4 percent to about $100 million.
The profit warning comes after increases in wholesale honey prices of up to 50 percent and weak consumer confidence in Australia and the UK, which made it hard to pass on rising costs.
"While we regret the need to downgrade the earnings outlook for this financial year, we remain confident that the reasons for the downturn are isolated and that mitigation measures are already in place," the company says. "The current strategy still holds with business on a path of strong earnings growth beyond this financial year."
The stock fell 1.3 percent to $3.85 in trading yesterday, and has gained 5.1 percent this year. It's rated a 'hold' by the one analyst following the company, according to Reuters data, with a target price of $3.65.
Comvita has been on a buying spree in the past year to lift its direct beekeeping ownership, producing a third of its honey needs, and last month bought an 85ha organic olive estate that has the potential to more than meet its requirements.
The company will announce its annual result in late May.