Today, almond growers Select Harvests [ASX:SHV] posted a net loss after tax of $96.2 million for the first six months of FY2023.
This result was drawn up to the events of a detrimental weather pattern caused by La Nina, which materially impacted the group’s crops over the six months between 2022–2023.
Potentially as a result of incoming optimism, the group’s share price jumped by 7% to $4.66 in the afternoon. However, year-to-date shares have improved by 19.5%. Longer term, the stock has some catching up to do:
Source: TradingView
Select Harvests talks weather, China, pricing and 2024
Select Harvests reported an underlying EBITDA loss of $55.6 million and a full EBITDA loss of $117.4 million.
The result of La Nina’s weather caused material impacts on the group’s results in the half year and affected the resultant ‘write-off of goodwill’.
The harvested portion of the 2023 crop had been valued at an estimation of fair value, taking away the costs required to sell, and decreased in volume to 17,500Mt (39.7% down).
Having said that, the good news was that the second half result is not expected to reflect any impact of the 2023 crop result — assuming there are no changes to the 2023 crop fair value assumptions.
The almond pricing estimate has also risen since last year by 9.6% to AU$7.45 a kilogram. This was mostly due to growing conditions deteriorating in the US during the bloom period and the market gaining in activity on the reopening of China.
Select quoted March 2023 shipments from the Australian Almond Board position report were 60% higher than March 2022. This continued the trend of improved market activity and increased stock movements.
Key export markets were said to have become more active, particularly with China out of lockdown, helping to restore export demand to pre-COVID levels.
Select also said that the Indian market is aggressively sourcing a variety of almond products. This allows the company to grow its customer base in the key markets of the Middle East and Southeast Asia.
Managing Director, David Surveyor, commented on improving conditions for 2024:
‘Early indications are that the 2024 crop is on track to return to normal yields. Following three years of the wet La Nina weather patterns, the Bureau of Meteorology has forecast that Australia is likely to move into an El Nino pattern which is typically favourable for growing almonds.
‘Additionally, fertiliser pricing has reduced as expected. The global almond pricing environment is favourable.’
Operating cash flow for the first half of FY2023 was negative $26.7 million, compared to a positive $15.3 million at the same time last year.
This was a difference of $42 million, while losses per share had been 79.5 cents each.
As a result, there was no interim dividend declared for the first half of FY2023.
From bad weather to the reign of copper
While we wait for weather conditions to improve for our nut growers, let’s talk a bit about metals.
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Regards,
Fat Tail Commodities
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