Good finish to year lifts Comvita's earnings

Comvita CEO Brett Hewlett

Bay of Plenty honey and health products company Comvita has reconfirmed earlier guidance to the market on its improved performance for the financial year ended March 31.

"Comvita had an especially good finish to the fiscal year," said chief executive Brett Hewlett. "We have good sales growth momentum domestically, and in Australia and our Asian markets, carrying into the new fiscal year."

Guidance issued in November, when Comvita went through a capital-raising exercise, forecast sales of $142.5 million, up 24 per cent on the previous year, and net profit after tax of $9.5 million, up 25 per cent on the previous year. The company would comfortably achieve the forecast numbers when it issued its audited results next month, said Mr Hewlett.

Earnings, as usual for Comvita, had tracked more strongly in the second half of the fiscal year and it had proven to be a good season for honey production and an improvement on 2013-14, he said.

Comvita has built up its supply chain over the past year with the acquisition of NZ Honey and the formation of Kaimanawa Honey, a 50-50 joint venture with iwi group East Taupo Lands Trust.

However, while Comvita had integrated the operations of NZ Honey, which produced the well-known Hollands Honey, 3 Bees and Sweet Meadow brands, it was restructuring the New Zealand Honey Producers Co-Operative, which it acquired as part of the deal.

The Timaru-based co-op has 70 beekeeper shareholders with most in the South Island.

"We have found it hard to sustain the co-operative structure," said Mr Hewlett. "It wasn't really actively involved in collecting or processing the honey of its members. The product was coming straight to our manufacturing unit."

The co-op had now decided to cease trading, wind up its operations and have the members deal directly with Comvita.

The original settlement included $2 million of Comvita shares held in escrow to be released to the co-op annually over six years. As a result of the restructuring, the majority of the shares would be returned to Comvita, with a portion or cash equivalent released to co-op shareholders who entered into supply agreements.