Select Harvests produces big almond crop but COVID-19 impacting on sales

Select Harvests’ latest profit is only half the 2019 result, despite a similar almond crop size. What are the reasons behind that?

Low almond prices have impacted on Select Harvests’ profits in 2020.

HIGHER water costs and lower almond prices were the main contributors to a halving in Select Harvests’ after tax profit for the year to September 30.

Releasing its full-year results this morning, Select Harvests reported a net profit after tax of $25 million, less that half the $53 million recorded for the 2019 financial year.

Earnings before interest, tax, depreciation and amortisation fell from $95.2 million in 2019 to $57.8 million, largely due to a lower almond price.

The almond price fell 12.8 per cent to $7.50 a kilogram over the past year and was well below the $7.95/kg average for the past five seasons.

The fall in price from $8.60/kg in 2019 to $7.50 this past season accounted for a $25 million hit to Select Harvest’s NPAT.

But on a positive note, managing director Paul Thompson said there was a record crop of 23,250 tonnes, costs except for irrigation water had been contained, sales of its Sunsol almond brand had grown and had bought a significant orchard in Piangil which was expected to increase its annual harvest volume by 10 per cent.

“I would describe the result as a solid result,” Mr Thompson said.

“Despite a 40 per cent increase in the absolute cost of water, we’ve been able to maintain a position as one of the lowest cost almond producers with a cost per kilogram of $5.36.”

Select Harvests chief financial officer Brad Crump said COVID-19 had delayed some shipments to overseas buyers, resulting in renegotiation of contracts and higher inventories.

Mr Crump said the delayed shipping scheduled had also resulted in net bank debt rising to $57.5 million, after recording $7.9 million in cash sitting in the bank at September 30, 2019.

He expected the shipments to improve during the first half of 2020-21.

Mr Thompson said any improvement in almond price was subject to the US selling its 2020 crop.

The US accounted for 80 per cent of global production and produced a large crop this year.

Mr Thompson said the US dropped its price to move crop and so far this year, shipments were 25 per cent higher than at the same time last year and 53 per cent of its crop sold.

“We need as much of this crop being cleared before we start selling ours,” he said.

Select Harvests will pay a four cent dividend on February 5 on shares held on December 11.

MORE

ALMOND EXPORTS 30 PER CENT LOWER

SELECT HARVESTS BUYS PIANGIL ALMOND ORCHARD

ALMOND HARVEST ON A PAR WITH 2019

Peter Hemphill’s family holds shares in Select Harvests.