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29 July 2024

Daily Newsletter

29 July 2024

Comvita shares dive on impairment charge warning

The Manuka honey maker said a 2024 loss after tax would worsen if an impairment is realised.

Simon Harvey July 29 2024

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”.

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.

Pasta and Noodles Market Overview

Per GlobalData, the pasta and noodles market size was estimated at $89.2 billion in 2022 and is likely to grow at a CAGR of more than 3% from 2022 to 2027. The rising health & wellness trend among consumers, busy lifestyles, and rapid urbanization will boost the demand for convenient and easy-to-cook pasta & noodles. Factors such as the rising disposable income levels and urbanization in major markets across the Asia-Pacific, such as China, Japan, and India will play an important role in fueling the sector’s growth in the future.

Pasta and Noodles Market Overview

Per GlobalData, the pasta and noodles market size was estimated at $89.2 billion in 2022 and is likely to grow at a CAGR of more than 3% from 2022 to 2027. The rising health & wellness trend among consumers, busy lifestyles, and rapid urbanization will boost the demand for convenient and easy-to-cook pasta & noodles. Factors such as the rising disposable income levels and urbanization in major markets across the Asia-Pacific, such as China, Japan, and India will play an important role in fueling the sector’s growth in the future.

Pasta and Noodles Market Overview

Per GlobalData, the pasta and noodles market size was estimated at $89.2 billion in 2022 and is likely to grow at a CAGR of more than 3% from 2022 to 2027. The rising health & wellness trend among consumers, busy lifestyles, and rapid urbanization will boost the demand for convenient and easy-to-cook pasta & noodles. Factors such as the rising disposable income levels and urbanization in major markets across the Asia-Pacific, such as China, Japan, and India will play an important role in fueling the sector’s growth in the future.

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