Comvita defies recession with strong first-half earnings, shares jump

Thursday 12th November 2009

Comvita Ltd, the healthcare products manufacturer, continued to see strong growth in its home and all export markets, bar the U.K., to produce a $1.6 million net profit for the six months to September 30.

The result came on 27% sales growth to $40.1 million for the half, driven by increased demand and expanding margins in New Zealand, Australia, Hong Kong and Taiwan and gave basic earnings per share of 5.81 cents, an enormous jump on the 0.67 cents earned per share in the same period last year.

The company announced an increased interim dividend of 2 cents per share, payable on Dec. 18. Comvita shares jumped 4.4% in trading immediately following the announcement, to $1.20, continuing a run-up of 53% in the last six months.

"The natural health products market has escaped any significant impact of the recessionary downturn," said Comvita's chief executive, Brett Hewlett.

In the UK, intense competition pressures on manuka honey, recession-hit retail sales, and the weakness of the UK pound against the New Zealand dollar had all taken their toll.

Comvita's four divisions - healthcare, functional foods, personal care, and medical - were experiencing "solid growth", with several new product launches during the southern hemisphere winter.

Chariman Neil Craig said Comvita's monthly sales "are now at a level that are expected to provide sustained and improved profits" following infrastructure investments over the last four years, inventory reduction and manufacturing cost control. "Our objective now is to convert our strong sales performance into better earnings margins."

The company anticipates strong sales during the northern hemisphere winter, although the strength of the New Zealand dollar "remains a concern," despite hedging an average 60% of net forward receipts for the next 12 months.

Businesswire.co.nz

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