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Sudden Falling Chinese demand and the loss of a key North American customer led honey company Comvita to report a full-year loss of $77.4 million.
That’s a big turnaround from last year’s profit of $11.1 million.
Revenue fell to $204.3 million from $234 million.
Sales in China fell by more than $19 million, or 17.6%, to $89.8 million in fiscal 2024 due to economic challenges.
The company said the cancellation of the country’s major shopping festival and weak sales at other events had severely impacted demand for Comvita products.
North American sales fell 26.6% to $26.1 million. Comway said the loss of part of a major customer’s distribution channel had a significant impact.
Chief executive David Banfield said the result was extremely disappointing, particularly after three consecutive record years.
“Throughout FY24, we faced difficult trading conditions in key markets coupled with aggressive pricing action by competitors due to excess inventory in the industry.
He said the company was already taking action to target some high-value consumers while trying to leverage its brands in key Asian markets.
“In addition, we have a clear focus on reducing inventory, thereby enabling us to reduce net debt to target levels.”
Banfield said Comway is also implementing a cost-cutting plan aimed at saving $10 million to $15 million.
“The aim is to simplify and streamline the business and ensure flexibility during different economic cycles.”
Last week Comvita announced Banfield to step down as CEO and managing directorand will serve as an advisor to the board.
A glut of honey won’t help
Conway said overproduction of honey between 2017 and 2022 had resulted in a glut of honey on the global market that needed to be cleared.
However, the number of hives began to decline as an oversupply of honey made honey production no longer economically viable.
New Zealand’s beehive supply fell by 56% between 2020 and 2023, and the number of hives is expected to fall by half to 500,000 by 2025.
Kangwei said that the reduction in supply will restore the balance between supply and demand in the short term and bring related economic benefits.
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