23 May 2013

Comvita profit down as cost of manuka honey rises

2:06 pm on 23 May 2013

Comvita's full year profit has been hit by the high New Zealand dollar and a sharp rise in the cost of manuka honey - a key ingredient in many of its products.

The health and beauty products manufacturer's after-tax profit fell 9.8% to $7.4 million for the year ending March. That was despite an 8% rise in annual sales to $103.5 million.

Challenging trading conditions in the UK, Europe and Australia along with the strong New Zealand dollar also also nibbled at returns.

But Comvita says strong demand in Asian markets lessened the impact.

In February, Comvita was forced to downgrade its profit expectations due to honey shortages, which pushed up prices by 50%.

Chief executive Brett Hewlett says the costs could be passed on to customers in Asia, where there is strong demand, with little effect on sales.

Mr Hewlett says the UK and Australian markets are more price sensitive.

Comvita says manuka honey supply is returning to normal as a result of an above average summer flowering season this year, and its purchase of another apiary business. It now has 16,000 hives, making it one of the country's largest beekeepers.

The company says its debt has increased to $25.3 million due to investment in it aparies and expanding its manufacturing facilities.

The company will pay a final dividend of 9 cents a share.