Comvita profit dips 10% on honey shortage, rising costs

Comvita, which produces health products from manuka honey and olive leaves, posted a 10 percent decline in full-year profit, beating its own guidance as it coped with a shortage of honey and higher costs.

Net profit fell to $7.37 million, or 24.52 cents a share, from $8.2 million, or 27.85 cents, a year earlier, the Te Puke-based company says in a statement. Sales rose 8 percent to a record $103.5 million, exceeding its February forecast of about $100 million.

Comvita shares last traded at $3.75 and are little changed this year. In 2011, the company held off a hostile takeover offer of $2.50 a share, which was below an independent valuation of the company at the time of $3.40 to $4.

The company says strong demand from Asian markets China, Hong Kong and Korea helped insulate it from a shortage of honey and increased costs.

That helped offset "challenging trading conditions" in the UK, Europe and Australia, and the impact of a high kiwi dollar that pushed down earnings before interest, tax, depreciation and amortisation by 5 percent to $14.7 million

Honey supply is now returning to normal levels following an above-average summer flowering season, it says.

"We have taken steps to shore up our manuka honey supply with long term supply contracts, and acquisition in October of another large manuka honey apiary business and the expansion of hive numbers,"  chairman Neil Craig says.

"The 2013 manuka honey harvest has been much better than the prior year and we expect the raw material supply to return to normal this year." He did not give a forecast for the current year.

Comvita will pay a final dividend of 9 cents a share, making 13 cents for the year, down from 14 cents a year earlier.

(BusinessDesk)