Comvita blames China’s poor trade conditions for net loss

The net loss for the fiscal year included $10.8 million of non-recurring items and non-operating after-tax costs.

Lower sales and the resulting higher finished goods inventories impacted intra-group profits, affecting EBITDA by USD 5.5 million.

Net debt at year-end was $79.7 million and inventories were $138 million, in line with previous guidance.

Comvita faced a combination of one-time, non-operating net costs of $7.3 million and several negative tax impacts of $3.5 million, including changes to the commercial building depreciation tax.

The board hired an independent expert to provide advice on the impairment.

“The need to consider impairment arises when there is a material gap between the total value of a company’s net assets (tangible and intangible) and its market capitalization,” the company said.

“Any impairment is likely to have a further material, negative, non-cash impact on net profit for 2024.”

Comvita said it would inform the market once an impairment has been determined, in line with its continuing disclosure obligations.

Chief executive David Banfield said trading conditions in key markets remained difficult. That, along with $10.8 million in one-off expenses and tax revenue, led to an “extremely disappointing” result.

“Given the ongoing commercial uncertainty, we remain focused on achieving the significant cost reduction targets of $10 million to $15 million that have been previously confirmed to the market, and returning Comvita to the profitable growth we achieved between 2020 and 2023,” he said.

Chairman Brett Hewlett considered options on how to best address market challenges, reduce costs and return the company to profitable growth.

“We will be more cautious about how we deploy capital and resources while focusing more on immediate value-creating opportunities,” Hewlett said.

Jamie Gray is an Auckland-based journalist covering financial markets and the primary sector. He joined Herald in 2011.