Select Harvests Limited (ASX: SHV) reported a 17% gain in half-year underlying net profit and a 36% increase of its interim dividend. Revenue for the almond producer and nuts distributor was slightly down, but higher average almond sales prices drove underlying earnings up.
Here are the key half-year results:
- Revenue $100.6 million, in line with $100.7 million in first half a year ago
- Earnings before interest, tax, depreciation and amortisation (EBITDA) underlying EBITDA $35.5 million, up 23.7%
- Net profit after tax (NPAT) reported NPAT $18.8 million, up 2.2% / underlying NPAT $21.5 million, up 17%
- Earnings per share reported EPS 30.4 cents per share, down 5% / underlying EPS 34.6 cents per share, up 8%
- Dividend per share interim dividend 15 cents per share unfranked, up 36%
Half-year business highlights:
— 80% of the 2014 almond crop has been sold and delivered, yet a crop downgrade due to bad harvest conditions impacted first-half results by $3 million before tax. Fortunately, almond sale prices rose about 20% to $10.20/kg from $8.50/kg on the back of supply constraints in the California almond market, which is a leading world supplier.
— The company's food division, which distributes nut and dried fruit brands like Lucky, Sunsol and Soland, saw a slight increase in operating earnings on a 9.4% gain in revenue. The Lucky brand, which investors may find in their local supermarkets, now holds about 42% market share.
— The company acquired two properties with existing almond orchards and unplanted acres for $2.7 million, which impacted reported NPAT. Before significant items, underlying net profit was up 17%.
Over the past two years, Select Harvest and other Australian food producers like Tassal Group Limited (ASX: TGR) (well known for its Tasmanian salmon), and onion and walnut producer Webster Limited (ASX: WBA) have seen strong share price gains on solid revenue growth. There are promising growth opportunities in supplying expanding Asian food markets. Australia is seen as a high quality producer and a safe food source.
