Comvita looks to cut jobs, slash production after lower sales in China

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Comvita posted a $16.8 million net loss after tax in its unaudited financial results for the 2024 financial year.
Photo: Supplied

New Zealand honey company Comvita is looking at cutting jobs and slashing production amid lower sales and weak demand from Chinese consumers.

The NZX-listed company posted a $16.8 million net loss after tax in its unaudited financial results for the 2024 financial year on the NZX on Monday morning.

The figure was subject to an impairment adjustment, yet to be calculated – which will be advised on by an independent expert engaged by the board.

Total revenue was $204m – much lower than previous guidance of $211m to $218m.

Chief executive David Banfield said the result was “extremely disappointing” – driven by challenging trading conditions, non-recurring expenses and tax impacts.

He said lower sales reflected the economic challenges in China with reduced consumer spend and confidence.

“A year ago, we were we were celebrating record performance in China. And what we really see in the market itself, it’s not something that we are doing, it’s about consumer confidence in that market,” Banfield said.

“We have no doubt that that will come back at a certain point in time.”

He said there was significant inventory of stock in-market – worth about $60m – that had to be worked through, which would affect production levels in New Zealand.

“We produce according to demand so obviously we have product in-market that is ready to meet current demand,” he said.

“So in the short term, that might mean that we produce less – will mean that we produce less – but then obviously once those in market inventories sell through, then we’ll produce again to meet the ongoing market demand.”

The company is eyeing cost reductions of $10m to $15m by 2025.

Banfield said there had been an organisational restructure in the last few months – which was accounted for in the unaudited results.

And further cuts were expected, as proposals including job losses were sent out for consultation with staff – due in late August.

“It has been a one of the painful but right decisions to make that we finished financial year ’23 – so a year ago – with record sales and record profit, and this last year we’ve experienced the impact of a slowdown in sales,” Banfield said.

“That means that we must come back and look at our costs and that’s a combination of cost of production and also the total headcount within the business globally, so we’re in the middle of doing that.”

But he said there was hope confidence would return in China, and performance would lift.

“The long term outlook is good. I think that if you look at natural premium health and wellness globally, everything says that this will be a long term trend.”

Company chairman and shareholder Brett Hewlett said he too was extremely disappointed with the year’s result.

“The board is reviewing its options for how best to carefully navigate these market challenges, reduce costs, and to return the business to profitable growth as soon as possible,” he said.

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