Comvita posts 15-month profit of $18.5m, lowers dividend ratio to pursue 'opportunities'

Comvita [NZX: CVT], the manuka honey products company, posted a 15-month profit that broadly met its guidance while lowering its dividend payout ratio to chase "growth opportunities".

Profit was $18.5 million in the 15 months ended June 30, after Comvita changed its balance date, from $10.2 million in the 12 months ended March 31, 2015, the Te Puke-based company said in a statement. Comvita reported profit of $17.2 million in the 12 months ended March 31, 2016, and had said that as the April-June quarter was typically Comvita's quietest the 15-month result was likely to be in line with the 12 months to March 31.

Chairman Neil Craig said that after adjusting "for favourable non-operating changes in fair value of assets, primarily Derma Sciences and SeaDragon, it is pleasing to have delivered $17.1 million against this guidance."

Sales were $231 million in the latest 15 months, from $153 million in the March 31, 2015, 12-month period. Its earning before interest, tax, depreciation and amortisation margin was 17.1 percent in the latest 15 months from 15 percent in the previous 12-month period.

Comvita paid a fully imputed second interim dividend of 10 cents per share on June 24, bringing total interim payments to 16 cents from 13 cents a year earlier. With the change of balance date it would pay a final dividend of 2 cents on Sept. 23 with a record date of Sept. 16, bringing payments for the year to 18 cents a share.

The payout ratio for the 15-month period amounts to about 42 percent of operating profit, which was lower than the company's previously adopted ratio of 50 percent of operating profits.

"With the growth opportunities being presented to Comvita on an ongoing basis, the board has decided to change the dividend payment policy to 40-45 percent of after-tax operating profits," it said today.

Chief executive Scott Coulter said Comvita has "experienced softer trading conditions as a result of the slowdown in demand in the Chinese market."

"This has been caused by a reduction in growth in the Chinese economy itself, as well as the introduction of a number of new regulations in that market that have created uncertainty in the re-export market distribution channels out of New Zealand and Australia," he said. "With our direct access to the China market through our dedicated distributor, we expect to reduce the impact of any downturn in sales through the re-export channels."

Coulter said it was too early to give guidance for the current year although the company remains"confident of our overall strategic direction and growing sales through an increasingly diversified product range with a strong focus on earnings growth."

Asia was Comvita's biggest market in the latest period, account for $75 million, or 33 percent of sales, just ahead of Australia on $74 million, or 32 percent. New Zealand sales accounted for 25 percent at $57 million, followed by the US at $14 million , or 6 percent, and Europe at $10 million, or 4 percent.

Comvita shares rose 2.1 percent to $10.37 and have jumped 26 percent this year.

(BusinessDesk)

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