Natural healthcare company Comvita has posted a more than six-fold improved profit for the year, defying a global economic downturn and shrinking debt.
Comvita, the Bay of Plenty company which specialises in honey health products, reported an audited net profit after tax for the year ended March 31 of $5.01m, compared with a $770,000 profit in the previous year. Earnings before interest, tax, depreciation, amortisation and fair value movements of financial instruments for the same period were $10.98m on sales of $84.93m, which were up 19 percent on the previous year’s $71.4m.
Comvita’s sharply improved financial result was due to a continuing strong trend in sales and improvements in overall operating efficiencies, said Comvita chairman Neil Craig. “The business prospered in the face of the global financial crisis and the challenges this presented.”
Sales grew in all markets except a recession-hit United Kingdom, where severe competition and the British pound at a 25-year low against the New Zealand dollar saw virtually no return. Comvita reduced bank borrowings significantly during they year after borrowing heavily to buy in 2007 and 2008, Mr Craig said.
Net debt of $30.3m at March last year had been reduced to $11.54m through reduction in inventory, the sale of global licensing rights for Medihoney and the improved operating performance. In February Comvita was boosted by $3.25m when it completed a global licensing agreement for Medihoney woundcare products with Derma Sciences, a specialist woundcare company based in Princeton, New Jersey and listed on Nasdaq.
Comvita was able to build its stake to 16.7 percent, or 11.74 percent fully diluted, in Derma Sciences.
“While the licensing agreement had no material impact on the March 2010 result, ongoing earning streams in the order of $1m are anticipated in the current financial year and are expected to grow from that level over time,” Mr Craig said. Comvita was confident that the natural healthcare sector will continue to withstand the harshest impacts of the generally tough economic environment, he said.
While the trading environment in the United Kingdom and Europe remains difficult the company expected to grow sales in Asia, Australia and New Zealand in the coming year. The strength and volatility of the NZ dollar was a concern but the company would smooth the day to day impact by hedging foreign currency position of about 60 percent of net receipts up to 12 months forward.
Comvita expected total sales and bottom line profits to grow in the current period albeit, as was the case for 2010, there would be a bias towards the second half of the financial year. The final dividend will be six cents per share, taking the full year dividend to eight cents per share fully imputed.
Shares in Comvita were up 5 cents to $2.40 on the NZX this week.