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An abrupt drop in demand from China and the loss of a major customer in North America has led honey company Comvita to report a full year loss of $77.4 million.
It’s a big turnaround from last years $11.1 million profit.
Revenue fell from $234m to $204.3m.
Sales in China fell by over $19m or 17.6 percent to $89.8m in the 2024 financial year due to economic challenges.
The company said the cancellation of major shopping festivals in the country as well as weak sales in another event severely impacted demand for Comvita’s products.
Sales in North America fell 26.6 percent to $26.1m. Comvita said the loss of some distribution with one major customer had a significant impact.
Chief executive David Banfield said the results were extremely disappointing, particularly after three consecutive years of record performance.
“Throughout FY24 we faced difficult trading conditions in our key markets along with aggressive price activity from competitors caused by industry overstocks.
He said the business was already making moves to target some high-vlaue consumers while trying to make the most of its brand in the key Asian market.
“In addition, we have a clear focus on inventory reduction enabling us to reduce net debt to targeted levels.”
Banfield said Comvita also has a cost cutting programme underway aimed at saving $10m-$15m.
“It’s designed to streamline and simplify the business and ensure agility through different economic cycles.”
Last week Comvita announced Banfield would resign from the top jobs of chief executive and managing director, and would become an advisor to the board.
Glut of honey not helping
Comvita said overproduction of honey between 2017 and 2022 has resulted in a glut of honey that needs to be cleared in markets around the world.
However, hive numbers have began to decline as the glut made producing honey not financially viable.
Between 2020 and 2023 there has been a 56 percent reduction in supply in New Zealand and hive numbers are forecast to halve to 500,000 by 2025.
Comvita said the contraction in supply will see a return to supply and demand equilibrium with associated economics in the near term.