By Jenny Ruth
|
Thursday 3rd June 2010 |
Text too small? |
Honey products company Comvita's 19% increase in sales to $85 million for the year ended March and its 205% increase in net profit was in line with the company's guidance in April, says Selwyn Blinkhorne at Craigs Investment Partners.
The result showed robust growth despite the New Zealand dollar being consistently strong against all relevant currencies except the Australian dollar, Blinkhorne says.
“Strong sales growth was achieved in Comvita's main markets with New Zealand up 24.6%, Australia up 21.7% and Asia up 10.6%,” he says.
“The European market continues to be difficult in a recessionary environment with severe competition and very weak currencies against the New Zealand dollar.”
While European sales were down 15.2%, they account for only 10.5% of total sales.
Blinkhorne says the company's profit margins have increased for the last three half-year periods and reflect operating efficiencies, tight cost controls and rationalisation benefits achieved from its $50 million of acquisitions in 2008.
Net debt was slashed from $30.3 million in March 2009 to $11.6 million this March. “Comvita is now well removed from the vulnerable financial position of 2008 when interest cover was only 0.4 times and net-debt-to-equity was 44.5%.
Interest cover in 2010 was 5.8 times with net-debt-to-equity at 17.6%.”
Recommendation: buy.
Disclosure: Craigs Investment Partners chairman Neil Craig is also Comvita's chairman.
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