WHERE ARE ALL THE BEES? BUZZING IN CAPILANO PROFIT
Written on the 9 February 2015 by Laura Daquino
HONEY is in crisis, but Capilano (ASX: CZZ) is buzzing with sweet profits and a record high on the ASX today.
The Richlands-based company reported a NPBT of $5.12 million, up from $2.45 million for the same period last year before the impact of the Richlands fire and insurance reimbursements.
Revenue also increased significantly by 34 per cent to $57.9 million, growth coming from both domestic and export markets.
The average cost of domestic supplier honey for the half year to December 2014 increased to $4.61 per kilogram from $3.49 per kilogram.
However, CZZ company secretary Dirk Kemp today spoke of only good news coming from this $1.12 increase - provided the weather holds up.
Despite citing heightened competition, CZZ was confident it could continue as market leader, and that cost prices "delivered beekeepers better reward" and rising raw material costs have been "effectively recovered from the market with wholesale price increases".
CZZ noted a period of reduced domestic production in its release to the market today, but speaking with the company revealed this wasn't a concern. There are few major competitors currently on the market.
Also hinged to this was the company's acquisition late last month of Victorian honey packer, Yellow Pty Ltd, which currently trades as Chandlers Honey.
CZZ will be placing the retained staff in an existing facility at Maryborough, Victoria that is understood to have been vacant for some time.
"The reopening of this facility will expand our operational capability and prepare us to meet future sales targets, while absorbing an increase of packing demand of over 1,000 tonnes as a consequence of the acquisition," says Kemp.
"Private label suppliers are running out of honey, so it's an opportunity for us to pick up market share from these companies."
Kemp says CZZ is adding to its offering as well, to cater to changing preferences locally and tastes in the emerging Middle Eastern market. Export sales grew 19 per cent in the Middle East and Asia from the year prior.
"We are now supplying other branded products, covering the growing private label gap in the market," says Kemp.
"We are also expecting the Maryborough site to service our growing pool of premium customers, focusing manufacturing on glass packaging which is a preference of our Middle Eastern customer and more and more customers here too.
"There is still more growth to be found in honey."
CZZ's share price rose to $8.90 following the announcement, a leap of more than 10 per cent.