Select Harvests: Tanking almond price blamed for low 2022 half-year profit

Huge almond harvests and inventories in the US continue to depress global almond prices, with Australia’s Select Harvests far from immune.

Almond prices at 10-year lows and one of the wettest harvests on record have eaten away at Australia’s second biggest almond producer Select Harvests’s earnings.

The Australian Securities and Exchange-listed company is also losing its long-time chairman, widely respected agribusinessman Michael Iwaniw.

Select Harvests has announced a net profit after tax of $2m for the six months ending March 31. While it’s an improvement of $1.3m on the corresponding period last year, it is well down on recent years. In the same six months of 2020, NPAT was $17.4m, and as high as $20m in same six months of 2019.

At an investor briefing, Select Harvests chief executive Paul Thompson said: “The combination of lower global almond prices and a wetter-than-average, delayed harvest, have negatively impacted earnings.”

Select Harvests' chief executive Paul Thompson with an employee.

He said the company remained focused on completing this year’s harvest, which was 96 per cent picked, and delivering the highest possible level of quality and price for the forecast harvest volume of 29,630 metric tonnes, up 4.9 per cent on last year’s crop.

Due to the unfavourable market conditions and delayed harvest completion, no interim dividend has been declared, but Select Harvests chief financial officer Brad Crump said the board would review the options for making a year-end dividend payment.

Select Harvests’ estimated average almond selling price is $6.64/kg, up from $6/kg in the previous corresponding period. The fair value almond price was as high as $8.6/kg in 2019.

Mr Thompson said without an improvement in almond pricing, the second half result would be similar to the first half result.

Global almond prices have been depressed by consecutive years of record Californian harvests, which account for 80 per cent of global supplies. Shipping constraints have led to swelling US inventories in clogged ports and storage facilities and buyers are wary of how they are managed out.

Total revenue was down 19 per cent to $68.7m for the half-year ending March 31, down from $84.8 in the previous six-month period. Earnings before interest, taxes, depreciation, amortisation and restructuring or rent costs was up 18.8 per cent to $17.7m.

Meanwhile, Mr Iwaniw will step down as chairman after 11 years in the role, during which time Select Harvests has more than tripled its net asset base. His career began as a chemist with the Australian Barley Board, where he rose up the ranks to become managing director and steer its transition from a statutory body to an ASX 100 company.

Mr Iwaniw will be replaced by Travis Dillon, who was appointed to Select Harvests’ board in November last year. Mr Dillon is also chairman of Clean Seas Seafood and agricultural biochemical company Terragen Holdings Limited, and was previously managing director and chief executive of Ruralco.