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4 months ago
UPDATE 1-NZ's Comvita issues profit warning as informal channels to China struggle
April 5, 2017 / 12:08 AM / 4 months ago

UPDATE 1-NZ's Comvita issues profit warning as informal channels to China struggle

2 Min Read

* Annual net profit forecast at NZ$9 mln vs NZ$20-22 mln

* Shares sink 13 pct after warning (Adds market reaction, CEO comment)

WELLINGTON, April 5 (Reuters) - New Zealand honey exporter Comvita Ltd issued a profit warning on Wednesday due to problems with its informal channels into China, sending its shares down more than 13 percent.

The company said it expected net profit after tax to be NZ$9 million ($6.27 million) for the year ending June 30, lower than the NZ$20 million to NZ$22 million forecast in February.

"We are now assuming that the informal channels out of Australia and New Zealand into China will not recover to our earlier forecast levels before 30 June 2017," CEO Scott Coulter said in a statement.

The company's shares were down 13.3 percent at 2355 GMT compared with a 0.07 percent fall in the benchmark index NZX 50 .

Comvita said in its half-year results in February that it was trying to switch from informal channels such as personal shoppers, known as "daigou", to formal distribution channels for sales into China.

Luxury food and beverage products from New Zealand, such as manuka honey, are prized by China's growing middle-class due to the Pacific exporter's reputation for quality and safety.

Poor weather resulting in a reduced harvest was also contributing to the downgrade in expected profits, the company said. ($1 = 1.4343 New Zealand dollars) (Reporting by Charlotte Greenfield; Editing by Stephen Coates)

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