Mānuka honey company Comvita has 'strong' start to new year

Thursday, 22 October 2020

Comvita is a mānuka honey company founded in 1974 and is listed on the NZX.

Mānuka honey company Comvita says trading has continued to improve in the first quarter of its new financial year as it seeks to turn around its performance after two years of losses.

Chief executive David Banfield, who took over in January, told the company’s annual meeting in Paengaroa on Thursday that Comvita had a “strong” start to the new financial year, which commenced on July 1.

“I’m pleased to report a strong first-quarter performance with double-digit revenue growth, strong margins, costs in line with expectations, and with brand investment,” he said. “We have now delivered nine consecutive profitable trading months.”

The country’s largest producer and marketer of honey and bee-related products posted a $9.7 million loss last financial year, following a $28m loss the previous year. Banfield was appointed to transform the business and has overseen a restructuring to remove management layers, cut jobs, simplify structures and reduce the company’s product range by a third.

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“We aim to move from a complex to a simple organisation,” he said.

Comvita chief executive David Banfield was appointed in January to transform the mānuka honey company

In an effort to return to profitability this financial year, Comvita is narrowing its focus on mānuka and propolis products in the high-growth Chinese and North American markets where it is hoping to benefit from demand for foods claiming nutritional benefits.

China is the world’s largest honey market, valued at $1.8 billion, and Banfield said Comvita wanted to grow its own market share and the imported honey share of the total market. The imported honey market is currently worth $216m but could be worth $360m if it grew to 20 per cent of the Chinese market, he said.

“That is a prize worth focusing on,” Banfield said.

Comvita’s e-commerce business grew by 35 per cent last year and there was opportunity to accelerate it further, he said.

Banfield told shareholders the company was “absolutely focused” on delivery of its 2021 result, and maintained its full-year guidance. In the company’s 2020 annual report, Banfield said Comvita expected to return to profitability this year.

Comvita received $104,000 in government Covid-19 wage subsidies to retain employment of its retail and duty-free staff, but committed at Thursday’s meeting to pay the money back.

”This was done at the height of ongoing economic uncertainty for the business,” chairman Brett Hewlett said. “We intend to repay this wage subsidy once we return to reporting on a profitable result.”

Comvita shares rose 1.6 per cent in late afternoon trading on Thursday to $3.26, and have gained 8.1 per cent this year.