Comvita has revealed cuts were made in its workforce under a restructuring exercise as the New Zealand-based honey producer reported net losses widened.
“A complete restructure has simplified the business in EMEA, North America and China, including a headcount reduction of four in the leadership team, 67 people overall, and a move from an eight-person to six-person board of directors,” the publicly-listed business reported today (25 February).
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Comvita’s shares closed the day 6.4% lower at 73 New Zealand cents as the Mānuka honey maker reported a net loss after tax of NZ$6.5m ($3.71m) for the first half ended 31 December. That compared to a NZ$2.5m loss a year earlier.
Revenue for the period was NZ$99.7m, a decline of 5.3%. Sales in China, Comvita’s largest market, dropped 12.2% to NZ$41.2m due to “depressed consumer sentiment and aggressive competitor price promotions”.
Comvita added that the “heavy discounting particularly impacted market share at entry level, including in the digital space, something Comvita is working hard to address”.
The China sales decline was offset by a 12% increase in North America, reaching NZ$14.6m.
Sales in the rest of Asia rose by 14.9% to NZ$22.1m.
However, sales in Australia and New Zealand fell by 19.4% to NZ$15.5m as “difficult market conditions continued”, while EMEA sales decreased by 8% to NZ$2m.
The company’s gross margin declined by 930 basis points to 50.7%, with operating expenses reduced by 8.5% to NZ$56m.
Comvita disclosed accounting irregularities in FY23 and FY24, overstating post-tax earnings by NZ$1m and NZ$3m, respectively.
An independent review by an accounting firm, alongside an internal investigation, revealed overstated sales in China and Singapore, under-accrued sales expenses, and a historical inventory valuation error.
Comvita chair Bridget Coates said the accounting irregularities were deeply regrettable and the company has “implemented much stricter audit and risk controls”.
Coates mentioned that a hiring process for a new CEO is in progress. Brett Hewlett, who took over from David Banfield, assumed the role in August.
Looking ahead, Comvita expects sales to remain flat through FY25, with continued softness in China but steady improvement is anticipated in the rest of Asia and North America.
Hewlett believes that, despite various setbacks and difficult market conditions, Comvita is actively positioning itself for a potential recovery in FY26.
