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Strong crop, tough market: Select Harvests’ (ASX:SHV) half-year in a nutshell
  • Almond grower Select Harvests (SHV) has reported a $2.6 million fall in profits over the first half of its financial year
  • For the six months to March 31, the company reported $17.4 million in net profit after tax — over 13 per cent lower than the same time last year
  • Earnings were down by just over 10 per cent and revenue by 6.5 per cent
  • Still, the company said the result was strong considering the challenges faced over the half-year in the form of droughts and the COVID-19 crisis
  • Looking ahead, Select says it is expecting a better second half of the year
  • Importantly, the company is still paying out its nine-cent interim dividend, fully franked
  • Shares in Select Harvests closed 0.39 per cent higher today, worth $7.66 each

Almond grower Select Harvests (SHV) has reported a $2.6 million fall in profits over the first half of its financial year.

For the six months to March 31, the company recorded a net profit after tax of $17.4 million — 13.4 per cent lower to the $20 million pulled in over the same period last year.

Similarly, earnings before interest, tax, depreciation and amortisation (EBITDA) stood at $34.5 million for the half-year, down 10.4 per cent on the previous corresponding period.

Total revenue was 6.5 per cent lower at $93.5 million.

Of course, today's news should come as no surprise to investors, with Select Harvests warning back in February that demand for the crunchy snack was likely to soften due to COVID-19 woes and early-2020 droughts.

It seems this is precisely what happened. The company said today though volumes remained consistent to this time last year, margins have been reduced. However, the coronavirus is not solely to blame.

While it's true that the unsettled market resulted in a drop in almond prices, Select said near-ideal growing conditions in the U.S. for 2020 and a higher final tonnage result for the 2019 US crop pulled prices even lower.

Nevertheless, Select Harvests' Managing Director Paul Thompson spoke highly of the first half-year of trade despite the somewhat-soft results.

"The first half has delivered a good result considering the challenges of the drought and the disruption of the supply chain caused by COVID-19," Paul said.

"Similar to 2019, we are estimating a large, high-quality crop of 22,600 metric tonnes," he continued.

The company said looking ahead, it expects the second half of the year to deliver an improved result. The volume and quality of harvests are currently in line with expectations, and 60 per cent of Select's 2020 crop has been contracted for sale already.

Importantly, Select will still be paying an interim dividend of nine cents per share, fully franked. This is slightly below last year's 12-cent dividend, but likely still welcome news to shareholders as company's across the globe scrap or defer dividends entirely.

Shares in Select Harvests gained 0.39 per cent today to close worth $7.66 each.


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