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Comvita warns of first-half loss

NZN 26/10/2016 Fiona Rotherham

Manuka honey and health products company Comvita has warned its first-half result is likely to be a loss after tough trading in the first quarter of the 2017 financial year resulted in an unexpected drop in sales.

At its annual meeting in Te Puke, the company said the lower than expected sales were the result of a slowdown in the New Zealand and Australian informal trade channels in China following regulatory changes, including a restriction on sales by individual traders and a new border taxation of 11.9 per cent.

Comvita said it was starting to see these channels recover with sales now growing again on a monthly basis as traders adjust to the new rules but there will still be a loss in the first half result ending December 31.

The second half is expected to be profitable due to the seasonality of sales and the positive expected impact of its Kiwi Bee apiary business which has about 30,000 hives nationally and several thousand more under management.

Net profit after tax for the 2017 full-year is now expected to be similar to the $17.1 million in after-tax profit delivered in the 2016 financial year.

More then 60 per cent of Comvita's customers are Chinese which makes it an important market and "relationships in this market are critical," said chairman Neil Craig.

Shares in Comvita dropped 3.3 per cent to $10.30. They've gained 27.4 per cent since the start of the year.

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