Comvita shares continued a downward spiral as the Kiwi Manuka honey maker warned profits would be hit further if an impairment charge is realised.
The shares dived 8% on the New Zealand exchange today (29 July) as the business reported in a trading update losses after tax of NZ$16.8m ($9.8m) in the 2024 financial year.
Comvita said the loss could blow out “subject to impairment adjustment yet to be quantified, including NZ$10.8m of non-recurring items and non-operating costs after tax”.
Almost two months since Comvita announced a potential buyer had walked away from talks, having initially engaged in February, the company also said annual sales missed estimates. The shares extended the year’s slide to more than 51%, having halved in value since the start of 2024 to NZ$1.12.
Separate takeover talks also emerged in 2018 but a deal never materialised due to differences over a potential price tag.
Wellington-listed Comvita added the advice of an outside party has been sought over a potential impairment, which it said “arises when there is a material gap between a company’s net total assets (tangible and intangible) and its market capitalisation”.
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The company said an impairment is “likely to have a further material negative, non-cash impact” on its net profit after tax result.
Sales were weighed by “continued weakness” in China during the final quarter, with a “knock-on” effect to the rest of Asia.
Comvita flagged sales for the year of NZ$204.5m, compared to its guided range of NZ$211-218m.
EBITDA was presented as NZ$17.1m, excluding the implementation of an ERP system and non-operating costs, versus the guidance of NZ$23-28m.
The company lowered its sales and profit outlook in May for the second time this year and also said its longer-term strategic target to reach NZ$50m in EBITDA in the 2025 financial semester was unlikely to be met.
Consequently, Comvita launched a programme to realise savings of NZ$10m in 2025 through operating expenses and the cost of goods sold.
Those savings were today identified as NZ$10-15m but Comvita also has NZ$79.7m of debt on its balance sheet and inventory of NZ$138m.
Sales were lost this year by the partial cancellation of the 6:18 Festival, China’s second-largest retail festival.
“The flow-on effect to related markets in Asia has seen fourth-quarter sales below expectation,” Comvita said today.
Comvita also reportedly paid NZ$10m to acquire the HoneyWorld Singapore Manuka honey business last summer, a branded products retailer.
However, Comvita said today it has also exited from its 50-50 Medibee joint venture with Australia’s Hive + Wellness Australia at a cost of NZ$6.9m.
