Comvita (CVT) H1 2025 earnings summary

Executive summary

• Reported a net loss of $6.5M for the first half of FY25, compared to a $2.5M loss in the prior year, with revenue down 5.3% to $99.7M and significant inventory reduction and improved cash flow performance.

• Accounting irregularities identified in FY23 and FY24, particularly in China and Singapore, led to restatements, tighter internal controls, and strengthened audit and risk procedures.

• Ongoing restructuring includes cost reductions, organizational simplification, headcount and board reductions, and a culture reset to restore trust and operational focus.

• Positive free cash flow of $2.0M achieved, a significant turnaround from negative $25.9M in HY24, with net debt reduced to $81.6M.

• Market and industry conditions remain challenging due to honey surplus, price dumping, and subdued sentiment in China, but outlook is improving into FY26.

Financial highlights

• Revenue for HY25 was $99.7M, down 5.3% year-over-year; gross profit was $50.5M, down 20.1%, with gross margin declining to 50.7% from 60.0%.

• Operating expenses decreased by 8.5% to $56M, mainly from reduced marketing spend; restructuring costs increased due to headcount reduction.

• Operating cash flow improved to $9.8M (up $16M year-over-year); free cash flow positive at $2.0M (up $27.9M year-over-year).

• Net debt reduced to $81.6M, down from $85.8M year-over-year, with inventory reduced by $15M to $120.8M.

• Basic and diluted EPS: (9.21) NZ cents, compared to (3.50) NZ cents year-over-year.

Outlook and guidance

• Sales expected to remain flat through FY25 and FY26, with China remaining soft and gradual improvement in Asia and North America.

• Margins have stabilized, with further improvement anticipated as lower-cost inventory flows through and cost savings are realized.

• Full benefits of restructuring and cost savings expected to be realized in FY26, with annualized savings of $10M–$15M targeted.

• Directors remain confident in ongoing bank support and constructive lender negotiations.

• Industry honey harvests projected to be below average in 2024 and 2025, but supply security is strong.