The Select Harvests Limited (ASX: SHV) share price will be on watch after announcing the conclusion of its comprehensive strategic review of growth options and supply chain solutions for the food division.
Divestment plan for a Select Harvests asset
Select Harvests explained that the strategic review found that the Thomastown facility is not a core part of the future supply chain requirements and the strategic focus of the business is best directed to investing in the Carina West processing facility where it adds value and markets its almonds for sale in the domestic and export markets.
How did it reach that decision?
The conclusion was reached after considering multiple options including upgrading the existing Thomastown facility, developing a new production facility, outsourcing value-added production or investing in the Carina West facility and moving more value-added almond processing from Thomastown to Carina West, merging the Carina West and Thomastown facilities.
Select Harvests said that the decision has been made to restructure the food division to focus on Select Harvests’ competitive advantage in growing, value adding and marketing almonds in the domestic and export markets by expanding the Carina West facility.
The nut company announced that it has appointed its corporate adviser, Kidder Williams, to seek expressions of interest in the consumer branded business and Thomastown processing facility.
Carina West plan
Select Harvests revealed that it’s working on a progressive 18-month transition plan to move more almond processing from Thomastown to Carin West. That will mean investing in more jobs at the facility, as well as production capacity, new technology and new warehousing.
The nut business isn’t hanging around, it’s going to start investing immediately, with the stock pad currently being increased and a new paste machine arriving in April. Some of the investment was already in the long-term plan but has been brought forward due to the recent Piangil acquisition.
The Carina West facility will remain as an almond-only facility to avoid allergen contamination.
Select Harvest managing director Paul Thompson said:
We are focussed on delivering the best long-term return for our business and outstanding customer service to our customers. The expansion of the Carina West facility will create a supply chain that enables us to strengthen our competitive advantages in growing, value adding and marketing almonds in the domestic and export markets.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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