Challenging trading conditions and high non-recurring expenses dragged mānuka honey maker Comvita into the red for the June year. 

The company reported a net loss of $16.8 million, subject to what it said was an “impairment adjustment yet to be quantified”, compared with $13.1m profit in 2023. 

Comvita, New Zealand’s biggest mānuka honey exporter, said trading conditions in China caused continued weakness in the fourth quarter, including knock-on effects from this slow-down to the rest of Asia, so 2024 results were below the previous guidance ranges. 

Revenue came to $204.5m, down from a previous guidance of $211m to $218m. 

Full-year earnings before interest, tax, depreciation and amortisation (ebitda) came to $17.1m from a previous a guidance of $23m to $28m. 

The net loss for the year included $10.8m of non-recurring items and non-operating costs after tax. 

Lower sales and the resulting higher finished goods inventory affected inter-company profits, affecting ebitda by $5.5m. 

Net debt finished the year at $79.7m and inventory at $138m, in line with prior guidance. 

Comvita faced a combination of non-recurring, non-operating costs net of tax of $7.3m and several negative tax impacts of $3.5m, including commercial building depreciation tax changes. 

The board had engaged an independent expert to provide impairment advice. 

“The need to consider an impairment arises when there is a material gap between a company’s net total assets (tangible and intangible) and its market capitalisation,” the company said. 

“Any impairment is likely to have a further material negative, non-cash impact on the 2024 net profit.” 

Comvita said it would advise the market once that impairment was determined, in line with continuous disclosure obligations. 

Chief executive David Banfield said trading conditions in key markets were still challenging. And that, along with the $10.8m of non-recurring expenses and tax impacts, resulted in the “extremely disappointing” result. 

“Given ongoing trading uncertainty, we are focused on delivering significant cost reduction targets of $10m to $15m, as previously confirmed to the market, and to returning Comvita to the profitable growth that we delivered between 2020 and 2023,” he said. 

Chairman Brett Hewlett the board was reviewing options on how best to navigate market challenges, reduce costs, and to return the business to profitable growth. 

“We will be adopting a more cautious approach to the deployment of capital and resources whilst implementing a sharper focus on immediate value opportunities,” Hewlett said.