Comvita posts $77.4m loss after difficult year

Comvita cited 'unsustainable, aggressive' short-term price promotions from competitors as a problem. Photo / Supplied

Comvita has reported a $77.4 million loss due to significant one-offs and difficult market conditions.

Last year, it reported a net profit after tax of $11.1m.

Earlier this week, Comvita announced a non-cash impairment of assets of $59.8m as a result of its weaker performance.

That was made up of $13.4m in investments, $3.4m in tangible assets, and $43m in intangible assets.

It reported an underlying net loss of $5.6m versus an underlying net profit of $13.1m in the prior year.

Earnings before interest, tax, depreciation and amortisation (ebitda) were $59.6m.

The honey harvest for the 2024 year had been revalued downwards by $3m.

Comvita blamed the loss of a major customer in the North America market and a sharp fall in consumer demand in China for the poor result.

It also pointed to “significant, unsustainable, aggressive” short-term price promotions from its competitors due to overstocking.

Comvita chief executive David Banfield indicated he was less than impressed with the result. Photo / Supplied

Outgoing CEO David Banfield, who steps down on Aug 31, said he was extremely disappointed with today’s result, after three consecutive years of record performance.

Comvita has revealed that it breached a banking covenant but said it had obtained a waiver confirming no action will be taken. It is currently negotiating a revised covenant structure that it expects to be confirmed in September.

Banfield said the company had a clear focus on inventory reduction to enable it to reduce its reported net debt of $79.7m.

The company’s focus for the current financial year was on cost and debt reductions.

No dividend

Comvita will not pay a dividend this year. It is also not providing any guidance at present but said it would update the market on trading performance at its shareholders meeting in October.

Last February, Comvita was approached by an overseas bidder seeking to buy all its shares. By May, that offer was off the table.

Outgoing Comvita chair Brett Hewlett, who steps down on Aug 31 to become acting CEO, said urgent action was being taken to right-size the company and de-risk, without compromising its long-term potential.

The market was promising through to 2030 and beyond, he said.

The entire NZ honey industry has been struggling with difficult trading conditions.

Honey export revenue fell 21.2% in the two years to June 2023. According to Apiculture NZ data, total annual honey production for the June 2023 year was 12,000 tonnes, down from 22,000 the previous year.

That downturn followed strong growth in the mānuka honey sector between 2008 and 2020, when hive numbers trebled, peaking at around one million in 2019.

Comvita said the current economics of an apiary operation were unsustainable in the long term. It estimated hive numbers had now halved to around half a million.

-BusinessDesk