New Zealand-based honey business Comvita has cut its full-year revenue and profit guidance once more due to “subdued consumption in China and North America”.
In a trading update, the company revised its full-year revenue range to between NZ$225m and $235m ($137.1m and $143.2m), compared to November guidance of NZ$245m and NZ$255m.
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Reported EBITDA is now forecast to be between NZ$30m and NZ$35m, down from previous guidance of NZ$33m and NZ$38m, for the year ending 30 June 2024.
Comvita, whose share price fell 11% by midday NZST today (1 February), stated the update “is driven by weaker near-term consumer sentiment in China, a customer change in the US and a non-cash FX translation loss”.
The group’s revenue for the first-half of its fiscal year reached NZ$103m, down NZ$8.3m year-on-year. This included the contribution from the Singapore retailer HoneyWorld it acquired in July.
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Meanwhile, Comvita’s unadjusted EBITDA plummeted 32% on the previous year to NZ$9.5m.
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By GlobalDataCEO David Banfield said “We remain confident that our business model, premiumisation of the Mānuka honey category and long-term investment in our brand, puts us in a strong position once macro-economic conditions stabilise. We continue to maintain or grow share in our core markets, and we see premium retailers in the US and Middle East turn to Comvita as the only brand committed to growing the category with two new high-quality partnerships confirmed for H2.
“We remain committed to deliver cost reductions in H2 to protect our earnings and are forecasting a further reduction of debt and inventory in H2 supported by positive operating cash flow,” he added.
Revenue in China for the half-year stood at NZ$33m, down 19% on the previous corresponding period. The slowdown was “driven by macro-economic weakness, impacting the premium consumer category”, Comvita wrote in the filing.
North American revenue for the six-month period was NZ$13m, falling 37%. North America sales were impacted by the “loss of one customer in one region, inflationary pressure on discretionary spend and a disproportionately strong first half” in the previous year.
However, revenue in the “Rest of Asia” region improved 52% to NZ$19.2m driven by strong growth in Korea and Singapore.
“After three and a half years of consistent performance growing both top and bottom-line in-line with our market guidance and strategic plan we are disappointed in this result, which reflects current trading conditions,” Banfield said.
“The team and I are absolutely focused on doing everything possible to ensure a return to our pattern of consistent long-term growth”.
Comvita wrote that it is still “confident” of achieving NZ$50m in EBITDA for its fiscal 2025, but this would depend on the normalisation of trading conditions in North America and China.
