Manuka honey exporter Comvita is building up inventory for when supply chains normalise. Photo / NZME
Manuka honey exporter Comvita is building up inventory for when supply chains normalise. Photo / NZME
Comvita - New Zealand's biggest mānuka honey exporter - is building up inventory for when global supply chains return to normal after reporting its second-biggest profit on record.
Comvita said its net profit jumped by 35 per cent to $12.8 million in the June year on record turnover, driven bystrong digital sales growth in China and North America.
Earnings before interest, tax, depreciation and amortisation (ebitda) for the period came to $30.1m, up 18 per cent - the top end of its $27m to $30m guidance range.
The company expects to report double-digit earnings growth in the current 2023 year.
Like many other companies, Comvita has had to contend with global supply chain problems arising mostly from Covid-19.
"It would be great if it was just one consistent issue to deal with, but it starts at the almost bizarre end with the availability of pallets - as simple as that - to getting product on to boats," chief executive David Banfield told the Herald.
In China, online sales make up 60 per cent of Comvita's business there.
Up until the end of February, the trend in the off-line channel - shops - was improving with sales up 8 per cent.
But from March to June China's offline sales slumped by 46 per cent reflecting the impact of reimposed lockdowns.
"It says an awful lot about our capability - in-market - to be able to deliver a strong performance despite that disruption," he said.
Banfield said there were signs of normalisation in China but that the global supply chain still faced significant impacts.
"We took the decision that we wanted to build up inventory to make sure that whilst we have strong demand in-market, that we have inventory to meet that demand," he said.
"It's a combination of having inventory levels in-market to be able to meet demand, but then also making sure that we have raw material that we can convert that to inventory to make sure that we can meet forecast 2023 demand.
"We still believe that once global supply chains normalise, we will get back to our (inventory) target of circa $85m (by 2025)," he said.
Comvita chief executive David Banfield. Photo / File
Net debt increased by $21m over the year, primarily due to increasing inventory to offset global supply chain disruption and prepare for forecasted demand in 2023.
The company declared a fully imputed final dividend of 3.0 cents resulting in full-year dividends of 5.5 cps, an increase of 37.5 per cent.
Today's result follows a strategic review that started three years ago, which followed several years of underperformance.
"This is now the fifth consecutive reporting period where we have delivered double-digit earnings growth at or above guidance," chief executive David Banfield said.
"We see real momentum in the business in all key areas but still recognise how much opportunity we have to improve further."
Banfield said the company was on track to deliver its plan of $50m ebitda by 2025.
China and North America again put on a strong performance in this period with both markets delivering strong top and bottom-line growth, and market share growth.
Comvita launched local collaborations with high-profile brands in China and signed new partnerships expected to realise potential in the PRC.
North America posted another strong result in the world's biggest monofloral mānuka honey market.
Revenue there increased by 29 per cent and net contribution by 78 per cent. Banfield said Comvita was the fastest growing mānuka honey brand in North America.
Revenue in Australia and New Zealand increased by 7 per cent.
The company is forecasting double-digit earnings growth in 2023, with a strong bias to the second half.
