Comvita’s record earnings announced today endorse the company’s decision to reject the takeover bid by Singapore owned Cerebos.
The Paengaroa-based global natural health and beauty products company’s recorded a net profit after tax for the year ended March 31, 2012 of $8.2million up from $503,000 in 2011.
Sales rose by $14million in the last year from $82million to $96million. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 145 per cent to $15.5million from $6.3million.
The results are at the top end of guidance foreshadowed at the half-year result announcement last November and show Comvita is reaping the rewards of a growth strategy built on product innovation, an enhanced supply chain, control of channels to market and investment in research and development.
The directors have declared a fully imputed dividend of 10cents per share payable on June 29, 2012 for shareholders on the register on June 22, 2012 (the dividend reinvestment scheme will not apply).
This follows an interim dividend paid in December 2011 of 4cents per share and takes the total fully-imputed dividend for the year to 14cents per share, up from the previous year’s 3cents per share.
“This is a very pleasing result given that for four months, the board and management also had to deal with the distraction of an unwelcome takeover offer by Cerebos Pacific Ltd,” says Comvita chairman Neil Craig.
“We had solid year-on-year sales growth of 17 per cent, which we have been able to convert into even stronger earnings growth.
“This is a clear demonstration of the productivity gains possible from our business model, based on control of our channels from raw material supply through to the marketplace.”
“Our increase in dividend payout from our historical 40 per cent of NPAT to nearly 50 per cent is a reflection of our confidence in future earnings. At the same time as increasing the shareholder returns via dividends, we will continue to spend on capital projects that improve security of supply of all raw materials and increase profitability further.
“Our strong balance sheet and strong cash flow from operations, combined with significant borrowing headroom, allow this.
“We had $13million net borrowings at year end and an investment in US-based NASDAQ listed advanced wound-care and pharmaceutical company, Derma Sciences Incorporated, with a market value at year end of approximately $12million.”
Comvita’s most notable positive sales trends in its largest markets are New Zealand and Australia, both up13 per cent, and Asia where growth is 31 per cent. Growth in UK and Europe face the challenges of continuing economic uncertainty”, says Comvita CEO Brett Hewlett.
Comvita is no longer dependent on intermediaries in Australia and now deals directly with retail customers, a change in the distribution model that is delivering an improved overall margin.
In Hong Kong, where Comvita has 54 retail outlets, the company enjoyed significant same-store sales growth.
“Demand for medical honey based products continues to grow. Globally, Medihoney sales are currently growing at an annual rate of approximately 40 per cent,” says Brett.
“Derma Sciences Inc, Comvita’s medical products licensee and distributor, is also expanding other business streams with a number of advanced wound care technologies under development.”
During the year, Comvita further progressed land and apiary development programmes to increase supplies of Manuka honey by about 45 per cent. Comvita bought a Waikato-based beekeeping operation in October and commissioned a new state-of-the-art medical honey extraction facility near Kerikeri.
The company also invested in an expansion of our Paengaroa production facility, buying six hectares of land adjacent to its existing base.
“Comvita is on a solid growth trajectory that shows no sign of slowing. Our local presence in-market, our reputation for quality and success in expanding our product range is ensuring strong brand awareness and loyalty,” says Brett.