While a third poor harvest is not being ruled out, Comvita has increased its raw material honey purchasing and maintains a ''positive outlook'' for full year 2019.
Gross sales for its year to June were up 19% to $176.7million, earnings before interest, tax, depreciation and amortisation rose rose from $19.8million to $20.5million and after-tax profit declined from $9.8million a year ago to $8.2million.
Comvita shares are down more than 30% since starting the year above $8.30, and traded down slightly yesterday at $5.67, following the announcement.
Comvita chief executive Scott Coulter said the poor harvest had a negative $6.2million impact on after-tax profit.
''Unfortunately the weather did not play its part and for the second season in a row the honey harvest was poor.''
He said historically a third consecutive poor honey season in New Zealand was ''unlikely''.
Comvita had made changes to its apiary model, increased its marketing spend against lowering its overhead costs and renewed its focus on opportunities in its China and US markets. Because of the second poor honey season, Comvita had been aggressively buying more honey, with $89million of raw stock, to ensure its has enough honey for full year 2019.
Comvita said it was in a strong inventory position, up from $88million a year ago to $116million. Total sales were $186million, before a $9.3million deduction from its China joint venture, including $46million sales through the joint venture Comvita Food (China) Ltd, $8.7million UK sales, and $26.8million in sales in North America; the latter described as a ''breakthrough''.
Total revenue came from 71% of sales in functional foods, up from $90million last year to $132million and 23% was from healthcare products, down from $43million last year to $42million.
Medical was 4% of sales, declining from $11million to $7million and 2% was personal care products, up from $4million to $5million.
Net debt stood at $92million, with a further $25million available
Comvita had started a $12million upgrade of its warehousing capacity at Paengaroa, southeast of Tauranga, due for completion next February, including a photovoltaic solar system and rainwater storage.
''This will provide us the ability to store virtually all of our raw materials at Paengaroa in a purpose-built, state of the art, climate-controlled warehouse,'' Mr Coulter said.
In early July, Comvita completed its 20% investment in Uruguayan propolis supplier Apiter, whose propolis is similar to New Zealand's, for $US5.65 million cash and $US600,000 in shares. Propolis is an antimicrobial product made by bees, used in lozenges, toothpaste and other products.
Comvita declared a final 2c dividend, taking the full year to 6c, having changed its policy of providing 40%-45% of after tax profits for dividends to a range of 25%-30%; given the company's need for cash to fund growth.
