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Comvita’s unaudited financial results for fiscal year 2024 showed a net loss of $16.8 million after tax.
photo: supply
New Zealand honey company Comvita is considering job cuts and production cuts due to falling sales and weak demand from Chinese consumers.
The NZX-listed company announced its unaudited financial results for the 2024 financial year on the New Zealand Stock Exchange on Monday morning, reporting a net loss of NZ$16.8 million after tax.
That figure has been adjusted for impairment, but that has not yet been calculated and an independent expert hired by the board will advise on that.
Total revenue was $204 million – well below the previous forecast of $211 million to $218 million.
Chief executive David Banfield said the result was “extremely disappointing” due to tough trading conditions, non-recurring expenses and tax impacts.
He said the drop in sales reflected challenges facing the Chinese economy, with consumer spending and confidence falling.
“A year ago, we celebrated record performance in China. But what we really saw was that it wasn’t the market itself that was driven by what we did, it was the confidence that consumers had in that market,” Banfield said.
“We have no doubt that this will happen again at some point in time.”
He said there was a large amount of stock on the market – worth about $60 million – that needed to be dealt with, which would affect New Zealand’s production levels.
“We produce based on demand, so obviously we have products in the market that can meet the current demand,” he said.
“So in the short term it might mean we produce less – means we produce less – but obviously once the market stocks are sold out we will be producing again to meet the ongoing market demand.”
The company plans to cut costs by $10 million to $15 million by 2025.
Banfield said the company had undergone an organizational restructuring over the past few months, which was reflected in the unaudited results.
Further job cuts are expected as proposals including redundancies were sent out for staff consultation at the end of August.
“This is a painful but correct decision, having finished FY23 with record sales and profits a year ago, we were impacted by a sales slowdown last year,” Banfield said.
“That means we have to go back and look at our costs, which is the sum of our production costs and total headcount across our global operations, so we are doing that.”
But he expressed hope that confidence in the Chinese market could be restored and performance could improve.
“The long-term outlook is good. I think if you look at natural premium health and wellness globally, everything points to this being a long-term trend.”
Brett Hewlett, the company’s chairman and shareholder, said he was also extremely disappointed with this year’s results.
“The board is reviewing options to best respond to these market challenges, reduce costs and return the business to profitable growth as quickly as possible,” he said.
“We will take a more cautious approach to deploying capital and resources, while also sharpening our focus on the value opportunities that lie ahead.”
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