Comvita forecasts $6m loss after third poor honey harvest in row

Monday, 6 May 2019

Comvita is one of New Zealand's largest manuka honey manufacturers.

Honey producer Comvita is predicting a $6 million after-tax loss for the financial year after a series of setbacks has affected its business.

On Monday its share price tumbled 11.7 per cent to $3.70, its poorest performance in four years.

Adverse weather, the overcrowding of mānuka sites with hives from competing beekeepers and the tough mānuka honey standard have combined in a third poor year in a row for the Te Puke-based company.

Chief executive Scott Coulter said the results of this season's honey harvest were 'extremely disappointing' and he signalled a review of apiary business operations and under-performing assets, as well as withdrawing from sites that had become non-viable due to overcrowding.

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Comvita plans to shift more of its hives to its mānuka plantation sites to take advantage of better performing hybrids.

Comvita hives would be shifted to where there were large tracts of mānuka, including its own plantations. Over the last three years, 2000 hectares a year of high producing hybrid plantations have been planted.Earlier this year the company posted an after-tax loss of $2.7m for the first six months of the year but had forecast an improved second half result.

The Ministry for Primary Industries' honey definition introduced last year saw a large drop in the value of multi-flora mānuka.

Comvita is not the only company caught out by the new definition. Last month Northland's Tai Tokerau Honey asked MPI to have another look at the definition, after much of their mānuka honey failed the new test.

Overcrowding of hives in mānuka areas has led to a decline in Comvita production.

Head of New Zealand Food Safety Bryan Wilson said MPI stood by the definition but added its door was always open to listen to industry concerns and feedback.

'We've had no evidence so far that would cause us to rethink our regulatory definition. The definition was developed to provide strong assurance to our trading partners and consumers that what they were getting was genuine mānuka honey.

'The definition takes into account seasonal and regional variations. As part of our science programme, we collected and tested more than 700 plants from around the country over two flowering seasons. In addition more than 800 honey samples were taken from seven production years,' Wilson said.

Coulter said the impact of the poor honey harvest had overshadowed sales improvements. He anticipated a $4m after-tax profit in the branded business for the final quarter of the year, but this would not help turn around the expected overall loss.