Another mid cap with a solid interim out yesterday was Select Harvests (SHV) which boosted underlying profit 17% to $21.5 million for the six months to December.
The company is Australia’s biggest integrated almond producer and the third biggest globally (thanks to strong Chinese demand, almonds are a hot commodity right now).
Statutory net profit of $18.8 million was broadly in-line with the same period last year, thanks to the company writing off the costs associated with acquisitions in the half year period.
Group revenue for the six months to December 31 rose 2% to $100.6 million while earnings before interest and tax jumped 23% to $26.9 million.
Directors boosted the interim dividend from 11c to 15c a share, a rise of more than 30%.
But investors weren’t impressed and the shares fell more than 6% to $7.05.
SHV 1Y – California drought, Chinese demand help Select Harvests
That was a case of profit taking after the shares had run up from $5.96 on January 16 to $7.50 on Wednesday. That was the highest since late 2007.
The company said yesterday it expects to benefit from the weaker Australian dollar and high almond prices caused by supply concerns (there’s a long drought in California, a major global supplier) and the strong demand from Chinese buyers.
Select Harvests is the owner and manager of orchards, it processes almonds and supplies consumer brands including Lucky, Sunsol and Soland.
This supply-demand squeeze outlook has been pushing up almond prices and CEO Paul Thompson said yesterday, "Our current projection is a crop 30 per cent larger than last year, with almond price up 20 per cent. We look forward to a trouble free harvest and taking advantage of the strong market conditions.”
"Our strategy has been and remains to grow in the almond sector which has outstanding fundamental attributes," Mr Thompson said.
Almond prices are set in US dollars which means the company’s bottom line benefits from the drop in the Australian dollar against the greenback.
The statutory result was impacted $3.8 million of one-off pre-tax acquisition costs.
In August the company revealed approximately $60 million worth of orchard acquisitions, water entitlements and land.
Those purchases involved one-off costs of $3.8 million which were taken against the profit and loss account.
