Comvita (CVT) H2 2024 earnings summary

Executive summary

• FY24 revenue declined 12.7% to $204.3M, driven by macroeconomic slowdown, aggressive price competition, and honey market contraction in key regions, with significant declines in Greater China and the U.S.

• Reported net profit after tax was a loss of $77.4M, including a non-cash impairment of $59.8M before tax and non-recurring costs, with underlying NPAT losses also reported.

• Cost-out program targeting $10–15M in annualized savings is underway, with 53 positions reduced and a focus on agility and debt reduction.

• Early signs of market stabilization in China and ongoing premiumization and product innovation initiatives.

• No dividend was declared for FY24.

Financial highlights

• Gross profit margin was 55%, down 300bps year-over-year due to lower manufacturing recoveries and apiary revaluation.

• Operating cash flow was $5.3M, down from the prior year, with net debt increasing to $79.7M due to acquisitions and lower cashflows.

• Interest charges increased to $8.7M, $3M higher than last year.

• Inventory finished at $134.4M, with finished goods up $17M due to unmet sales forecasts.

• Underlying EBITDA was $14.6M, with reported EBITDA at –$59.6M after impairment.

Outlook and guidance

• No formal EBITDA guidance provided due to economic uncertainty; previous $50M EBITDA target withdrawn.

• Focus remains on cash flow generation, inventory reduction, and debt repayment.

• New bank covenant structure expected by September, with banks remaining supportive.

• Global honey category forecast to grow at a 6.5% CAGR to 2030, with early signs of stabilization in China and July 2024 Mānuka sales up 7.3% year-over-year.

• Trading update expected at the Annual Shareholder Meeting in October.