Almond grower Select Harvests blames La Nina for poor crops in 2022 and 2023

Almond grower Select Harvests has blamed La Nina climatic conditions for producing poor crops in 2022 and 2023 that saw it sink to a loss and cancel its interim dividend.

Almond grower Select Harvests has blamed the La Nina climatic conditions for producing poor crops in 2022 and 2023 that drove a write-off of goodwill, leading to a collapse to almost $100m in losses for the first half and the cancellation of its interim dividend.

Select Harvests, a fully integrated almond business consisting of orchards, both owned and leased, processing facilities and value-added processing, on Monday posted an interim net loss of $96.229m, a swing from a profit of $2.01m for the previous corresponding period.

The swing to a large loss was expected by the market.

Revenue for the period fell 11.4 per cent to $60.864m. The interim dividend was cancelled.

Shares in Select Harvests initially fell on the results, dropping to a low of $4.19, before rallying strongly in the afternoon. Select Harvests closed up 8.7 per cent at $4.74.

Managing director David Surveyor said climatic conditions had impacted the 2023 crop with cold and wet weather resulting in unusual growing patterns and lower yields.

Due to the 2023 crop volume forecast decreasing to 17,500 million tonnes, from 29,000 million tonnes in 2023, the net realisable value of the crop is less than the total costs to sell the crop. As a result, the full loss of the 2023 crop has been reflected in the first-half accounts.

Furthermore, Select Harvests said following a review, a significant portion of its remaining inventory was downgraded due to quality issues, primarily related to mould (from exposure to moisture). This remaining inventory has either been sold in the market at reduced prices or allocated to be used through the company’s value-adding facility. This downgrade had a $24m impact on the first-half results.

The second half would show a small loss with the recognition of six months of corporate and finance costs partially offset by non-crop related income, the company said.

On the outlook, the global almond pricing environment is favourable with a forecast lower 2023 US crop, positive recent US shipments bringing down inventory levels and active export markets leading to upward pressure on pricing. It expects an average crop price of $7.40 to $7.80 per kilogram.

“Early indications are that the 2024 crop is on track to return to normal yields,” said Mr Surveyor. “Following three years of the wet La Nina weather patterns, the Bureau of Meteorology has forecast that Australia is likely to move into an El Nino pattern which is typically favourable for growing almonds.”