Honey slump will hurt profit for Bay of Plenty's Comvita

This season's honey production is the worst in years, says Comvita chief executive Scott Coulter.

This season's honey harvest will be the worst for years after bad weather affected the nectar flow, with Comvita estimating it will have a 60 per cent shortfall in its apiary operations.

Comvita chief executive Scott Coulter said there was still time for an improvement in certain areas of the country if there was a lengthy period of fine weather.

Anecdotally, it appeared that "the whole industry is experiencing one of the most difficult honey production seasons for many years," he said.

Mr Coulter said the shortfall would affect Comvita's results, although the company had a good inventory of stock because it had been acquiring manuka honey from third-party suppliers during the past 18 months.

The business was "well-positioned to fully meet consumer demand from existing inventory for at least the next 12 months", he said, noting the current situation was an exceptional event, but industry players knew that not all seasons were good ones and planned accordingly.

The season usually starts in Northland in December and works its way down the two main islands. To date, only Whanganui appears to be relatively unaffected by the poor season.

Warwick Murray, chairman of the Manuka Action Group's Bay of Plenty branch, agreed that there seemed to have been a bad harvest across the country.

"It's been pretty widespread," he said. "It's one of those features of the industry you can't do a lot about. You really have to design your system to accommodate them."

The general manager of the Unique Manuka Factor Honey Association, John Rawcliffe, said it was obvious that this would not be a normal year.

"This is an opportunity to sit down, rethink and share and try and find a way through it. It will make the industry stronger at the end of the day."

Comvita half-year forecast:

Expecting to report on February 21 an after-tax loss of $7m to $7.5m for the six months to December 2016.

Harvest falls by two-thirds:

Comvita's apiary business is expecting a harvest of only 380 tonnes, well down from the average harvest of 974 tonnes.

Comvita chairman Neil Craig says that this will affect the company's ability to meet its 2017 financial forecast.

Last October, the company expected its net after-tax profit for the current financial year to resemble the previous year's after-tax operating earnings of $17.1 million. However, it reported that sales were significantly lower than the previous year because of a slowdown in trade channels into China.

Mr Craig said Comvita now anticipated that its after-tax operating earnings would be in the range of $5m to 7m, with most of the shortfall resulting from the poor honey season.

However, the sale of the Medihoney brand to Derma Sciences and the related intellectual property and imminent sale of its shareholding in Derma would push the net profit after tax earnings into the $20m to $22m range.

Chief executive Scott Coulter said Comvita was seeing strong sales in markets apart from a trade channel into China.

The China situation had improved during the past two months, but was expected to remain lower than normal in the short to medium term.

Mr Coulter stressed that he believed the drop in operating profit would be isolated to the current year, assuming the weather returned to normal.