Strong Earnings Momentum And Delivery On Comvita Purpose

• EBITDA $30.1M +18% and +110 bps vs PCP
• Operating profit $20.1M +65% vs PCP
• NPAT $12.8M +35% vs PCP
• Record revenue $209M +9% vs PCP
• Record margin 60.3% +640 bps to $126M +21.8% vs PCP
• Record investment in brand $28.1M as long- term brand building continued
• Strong top and bottom-line performance:
  • Top and bottom-line growth in focus growth markets, China and North America Top and bottom-line growth in Manuka honey product category
  • Top and bottom-line growth Ecommerce, Ecommerce 39% of total revenue
  • Top and bottom-line growth Ecommerce, Ecommerce 39% of total revenue
• Business transformation plan on track
• Net debt increased by $21.M since 30 June 2021 to $25.5M, leverage ratio <1x
• Positive operating cashflow
• 40% reduction in total recordable injury frequency rate (TRIFR)
• Fully imputed final dividend of 3.0 cps declared, full year FY22 dividends of 5.5 cps +37%

FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2022 NZ$ M

• Revenue 2022: 208.9 (2021: 191.7) Variance %: +9.0%
• Gross Profit 2022: 126.0 (2021: 103.4) Variance %: +21.8%
• Marketing Investment 2022: 28.1 (2021: 24.2) Variance %: +15.9%
• Operating Profit 2022: 20.1 (2021: 12.2) Variance %: +65.4%
• EBITDA* 2022: 30.1 (2021: 25.5) Variance %: +17.9%
• Net Profit after Tax 2022: 12.8 (2021: 9.5) Variance %: +34.9%
• Net Debt 2022: 25.5 (2021:4.6) Variance: +$20.9m
• Fully Imputed Dividend 2022: 5.5 cps (2021: 4.0) Variance: +1.5 cps

*EBITDA: Earnings before interest, tax, depreciation, and amortisation

Comvita (NZX:CVT) today announced a strong increase in earnings for the year ending 30 June 2022 at the top end of guidance. Net profit after tax increased by 35% to $12.8M and operating profit increased by 65% versus (vs) the prior corresponding period (PCP). EBITDA for the period was $30.1M +18% vs PCP to 14.4% of revenue a 110 bps improvement on the PCP, normalised EBITDA improved to 16% of revenue. Comvita also reported record revenue of $209M +9% as all markets bar one returned to top line growth. In addition, Comvita recorded record gross profit of $126M +22% vs PCP, percentage margin improved by a further 640 bps to 60.3% as its focus on core markets, channels, consumers and categories continued to drive sales, efficiencies and productivity. Comvita increased marketing investment to $28.1M a 16% increase vs PCP as it looked to further differentiate from competition and tell its amazing founding story to discerning consumers around the world.

All markets showing profitable growth, except one

Of note was all segments and markets within those segments (except one) reported both top and bottom-line growth, despite continued investment in marketing and building team capability to enable long term growth, bar one. The breadth and the underlying strength of this performance gives Comvita real confidence in its long-term opportunity. Comvita’s unique business model with highly capable and empowered people on the ground making it closer to customer, closer to consumer, and faster to act, continued to differentiate it from its competition.

Ecommerce sales reach 39% of total sales

In 2020 Comvita set out an ambitious target for 50% of all sales to be through ecommerce by 2025. This year saw ecommerce sales represented 39% of total sales increasing its share of total revenue by 15% vs PCP at accretive gross margins.

Record margin 60.3% +640 bps

Comvita reported record margin of $126M, +22% vs PCP and 60.3% +640 bps as its focus on core markets, customers, channels and products again delivered. Comvita’s focus has meant that over the last two and a half years they have been able to increase gross margin from around 43% to the result that is being shared today (over 60%). Aside from the positive impact of digital channel growth, Comvita has further initiatives underway to further improve utilisation and increase recoveries.

Long term investment in brand building continues

In line with its 60:15:20 2025 business plan (60% margin, 15% marketing to sales and 20% EBITDA to sales) Comvita increased marketing investment by an additional $3.8m or 16% to be 13.4% of revenue +80 bps vs PCP. Comvita’s marketing investment is part of its transformation plan and positions Comvita as a premium lifestyle consumer brand. Comvita was particularly excited to launch a number of co-branding initiatives with other high-quality brands around the world further increasing brand awareness and association equity.

ESG and carbon neutrality

Comvita has set out its long-term aim to be recognised as a global leader in ESG related performance including becoming carbon neutral by 2025 and net positive by 2030. Its published Harmony Plan sets out its commitment on climate action, social impact, bee welfare and supporting biodiversity. Comvita are delighted to share our greenhouse gas emissions inventory for scope 1,2,3 emissions. This is also shown at a gross and net level after subtracting the sequestration benefits of our Manuka forests. In addition, Comvita have shared their first ever Integrated Report which includes a value creation model.

Commenting on the performance, Comvita Chairman, Brett Hewlett, said “We are delighted to announce the second-best earnings of all time at Comvita, an increase of 34% in earnings per share and a 37% year on year increase in dividends to our shareholders. The result shared today gives more evidence we can deliver revenue, margin and earnings growth while investing in long term brand and business building activity.”

Group CEO, David Banfield, says “I would like to start by thanking the whole team at Comvita for the incredible amount and quality of work that has gone in to delivering the result we are sharing today. It’s testament to the dedication and focus of our team that we are able to report strong growth in all our markets (both top and bottom-line), except one, increased investment in our brands, strong increase in profitability and an increase in dividends to our shareholders. We know that there is still plenty of opportunity to improve further including digitisation of the entire business to release organisational time and capability. We are on track to deliver our 2025 plan of $50M EBITDA but again recognise that we need to keep delivering results to continue to build trust with all our stakeholders.”

$30.1M reported EBITDA (14.4%) normalised EBITDA 16%

Comvita’s reported EBITDA of $30.1M or 14.4% represents an increase of 18% and +110 bps vs PCP. The normalisedl EBITDA of 16% (+210 bps vs PCP) shows the progress Comvita are making to deliver their 2025 target of a 20% EBITDA margin.

FY23 guidance

Comvita is forecasting double digit earnings growth in FY23 with a strong bias to the second half. Ecommerce sales are forecast to be above 40% and are targeting a further 100 bps improvement in gross margin and marketing. Transformation investment is forecast to increase to $5.5M. Comvita aim to share a guidance range in Q2 once a clear view on timing of China offline retail re-opening.

“These are extraordinary times and as such delivering the second highest earnings result of all time at Comvita gives me immense pride and confidence in the progress we are making. I love the fact that while delivering strong financial performance and improvements in all key ratios, we are also delivering on our purpose that is captured in our powerful Harmony Plan. We have increased our investment in global projects for social and environmental impact and also invested in local projects in New Zealand that protect flora and fauna and support local communities. In addition, we have increased investment in our team, in order to recognise their performance, and also to live to our aim to be the best employer in New Zealand. This is now the fifth consecutive reporting period where we have delivered double digit earnings growth at or above guidance: we see real momentum in the business in all key areas but still recognise how much opportunity we have to improve further. We remain committed to pay back the support and trust shown by the Board, the extended Comvita whanau and all our stakeholders” concludes Banfield.

© Scoop Media