Comvita has reported a $77.4 million loss for the 2024 financial year, citing a fall in demand in China and the loss of a major customer in the North American market as the cause.
Revenue fell 12.7% from 2023 to $204.3m and no dividend was declared.
Comvita CEO David Banfield said he was extremely disappointed with the results after three consecutive years of record performance.
“Throughout FY24 we faced difficult trading conditions in our key markets along with aggressive price activity from competitors caused by industry overstocks.
“Our revenue and gross profit decline along with significant non-recurring costs and a non-cash impairment has resulted in a net loss of -$77.4m with an underlying net loss after tax of -$5.6m. “We already have action underway to target value consumers whilst continuing our brand premiumisation in key Asian markets.
“Our $10-15m cost-out programme is on target and is designed to streamline and simplify the business and ensure agility through different economic cycles. In addition, we have a clear focus on inventory reduction enabling us to reduce net debt to targeted levels.”
The mānuka honey industry experienced significant growth between 2008 and 2020, with hive numbers trebling, to peak at 1 million hives in 2019. This created significant oversupply to the market, which, coupled with declining exports and Comvita’s growing market share, meant that many beekeepers exited the category, with production down 56% between 2020 and 2023.
“The current economics of an apiary operation are unsustainable in the long run. It’s currently estimated that there are 500,000 hives in New Zealand (half the 2019 number). This contraction in supply will see a return to supply and demand equilibrium with associated economics in the near term. Comvita is well placed for long-term supply through its forest programme that is already productive.”
Weaker sales were reported in China, North America, Australia and New Zealand and Europe, the Middle East and Africa, offset somewhat by revenue growth in southeast Asia in its HoneyWorld retail outlets.
Sales in Greater China were $89.8m, down $19.2m, 17.6% on 2023. Sales were impacted by the cancellation of 12:12 shopping festival in December 2023, and 6:18 shopping festival in June 2024, as well as generally lower honey sales due to macro-economic challenges.
North American sales were $26.1m for the full year, down $9.5m, 26.6% on 2023 with the loss of some distribution with one major customer having a significant impact.
The Rest of Asia sales were $37.1m, up $5.3m or 16.6%. Australia and New Zealand sales were down 10.8% to $36.4m, primarily due to weak cross border sales to China market.
Looking ahead, Comvita chair Brett Hewlett said it had been a challenging time for the company.
“This has caused us to take urgent action to right-size the company, and to de-risk, without compromising our long-term potential so we can respond positively as market conditions stabilise.
“While market conditions remain difficult, we are continuing to efficiently build our brand, our product offers and our market position to sustain long-term value in a market that remains promising through to 2030 and beyond.”
