Comvita honey bounce back

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Local company Comvita has announced a bounce back to profitability for the second half of 2020.

The Paengaroa based Manuka honey company’s increased growth in China and North America has been pivotal to the resurgence.

Comvita reported a net profit after tax reported for the six-month period ending 31 December 2020 as $3.5m, versus a $12.97m loss in the prior corresponding period.

Reported earnings before interest, taxes, depreciation and amortization was $10.6m versus a loss of $8.8m in the PCP. Revenue increased to $98.9m, plus $5.5 per cent versus PCP, or 6.7 per cent in constant currency, with strong growth seen in focus growth markets and its core Manuka category.

Marketing investment designed to support Comvita’s long-term growth ambition increased by 25 per cent on the PCP as Comvita activated plans to drive brand affinity, telling its Bay of Plenty founding story to consumers around the world.

“We’re pleased with the progress the team has delivered over the last year,” says Comvita chairman, Brett Hewlett. “The Board and management have continued to transform the business at pace looking to ensure we deliver the performance that all Comvita stakeholders should expect.

“The result shared today shows that the ongoing transformation is multi-dimensional with revenue, margin, and earnings improvements, along with good financial and capital disciplines evidenced in net debt reduction, inventory reduction and cash generation. In line with our previous disclosure, and subject to delivering full year guidance, the board reconfirms its commitment to resume dividend payments at the end of this financial year.”

Comvita’s focus growth markets, China and North America, showed strong performance in this period with both markets delivering double-digit top and bottom-line growth.

China is the world’s biggest honey market valued at $1.8bn. Comvita’s long-term goal is to target market growth, growing the total addressable market, and market share growth. Revenue in China grew by 20 per cent and net contribution by 28 per cent versus the PCP, as Comvita invested in long-term brand building activity. Comvita also significantly strengthened leadership capability at its in-China subsidiary funded by efficiencies across the group with a focus on delivering strong foundations for long-term profitable growth.

Comvita North America posted another strong result with revenue increased by 38 per cent and net contribution by 222 per cent, though there was a delay in timing of some marketing activities to H2. Retail distribution increased by 170 per cent over the PCP, and digital sales increased by 87 per cent, now representing 41 per cent of H1 sales. Comvita is the fastest growing Manuka honey brand in North America.

“The team and I are encouraged by the results that we share today,” says group CEO, David Banfield. “We remain totally focused on delivering our new long-term sustainable business model that will enable us to simplify and streamline the business further, invest in telling our unique brand story to discerning consumers around the world, and connect with our fantastic in-market teams to deliver the most compelling consumer proposition in market.

“We look forward to sharing further progress over the course of the second half of the year.”

Covid-19 has had a material impact on revenue and earnings in Australia where business is traditionally focused on tourism and travel. However, the company has made good progress on its $15m business transformation programme announced last year, launched an additional three-year $10m transformation phase two, edged closer to its target of growing digital sales to 50 per cent of total group sales by 2025 and decreased their net debt.

“This is a special chapter in Comvita’s rich history as we turn 50 years of age in 2024-25,” says David. “The team and I are totally committed to delivering long-term profitable growth and ensuring that we put in place the foundations at Comvita to thrive for another 50 years.”

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