This article is from the Australian Property Journal archive
SELECT Harvests saw full-year profit more than halved to $25 million, as cost management and high yields partially offset softening almond prices and growing water costs.
Net profit after tax was $25.0 million, down from $53.0 million, while EBITDA was $57.8 million, dropping from $95.2 million.
“FY2020 has delivered a third consecutive year of increasing crop volume, validating the company’s targeted horticulture program and investment in risk mitigating frost fans and productivity enhancing on-farm technology,” Paul Thompson, Select Harvests’ managing director said.
The crop is a record 23,250 metric tons, up 560 metric tons on last year. Both its mature and immature orchards again yielded at rates higher than industry standard.
However, almond prices fell to $7.50 per kg from $8.60 per kg, while the water market remained challenging.
Select Harvests is nearing completion of its $129 million acquisition of the Piangil Almond Orchard in the Sunraysia almond growing region, about 86 kilometres from the group’s Carina West processing centre. The orchard has 389 hectares of immature almond orchards and a weighted average age of 10.9 years. The acquisition will increase Select Harvests’ planted area by 20% from 7,696 hectares to 9,262 hectares and is expected to increase Select Harvests’ almond production by approximately 4,600 tonnes in FY2021.
Thompson said recent monthly US almond shipment data showed demand has responded strongly to historically low almond prices, with record monthly shipments to key world markets.
“Select Harvests’ next crop will begin harvest in February 2021, with early deliveries reaching the market in April. By this time, a more definitive market and pricing environment is likely to emerge, supporting our next marketing campaign.”
Record, or near record water prices were witnessed across the Murray-Darling Basin. Select Harvests’ strategy of owning and leasing water entitlements protected the group from the full impact of increases in spot water prices. Thompson said the start of water season had seen better weather conditions and a movement of water prices back towards long-term averages.
The domestic market remained a challenge for the food division. Underlying demand and sales were higher for the industrial value-added almond business, but higher private label penetration and commodity costs negatively impacted the result.
Select Harvests was designated as a permitted business during COVID-19 period and has been able to trade throughout.
The pandemic did cause delays in some export shipments, impacting operating cash flow. An increased percentage of customer payments will fall into the first half of FY2021.
Net bank debt/equity ratio was 14.2%.
Earnings per share was 26.0 cps and a fully franked final dividend of 4 cps was declared, following an interim dividend of 9 cps.
