Camellia reports mixed results across its operations

The AIM-traded firm said that while it anticipated revenue growth compared to 2022, adjusted profit before tax for 2023 was expected to be lower than the previous year.

It said that projection was taking into account the significant ongoing pressure on macadamia prices, which was impacting its profitability.

However, Camellia said it remained confident in its ability to withstand operational and sales disruptions due to its substantial cash resources, investment portfolio, and limited debt.

Looking at tea, the firm said production in Kenya had started on a positive note compared to last year, although there was concern over recent incidents of violence targeting large-scale tea operations in the Kericho district.

The acts of violence were purportedly protests against the use of mechanical harvesting machines.

Camellia said its estates had not been affected, adding that it hoped authorities would maintain order and prevent any recurrence of such actions.

In Malawi, tea production was slightly ahead of last year despite the damage caused by Cyclone Freddy earlier in the year.

The season was still in its early stages for India and Bangladesh, meanwhile, although Camellia said it was disappointing that the Dooars region in India suffered significant hail damage in March and April.

Tea sale prices were generally lower compared to last year, primarily due to the shortage of foreign exchange in major consuming countries such as Egypt, Pakistan, and Iran.

Looking at other agriculture, Camellia said the avocado harvest in Kenya was yet to make significant progress.

Macadamia production in Kenya, Malawi, and South Africa was meanwhile in line with expectations, with volumes anticipated to exceed last year's levels.

However, macadamia sale prices had further declined in the last month, and were continuing to face significant pressure.

Persistently high food costs in the UK had meanwhile attracted media attention, Camellia noted, as had the issue of major retailers not paying farmers reasonable prices for produce.

Government interventions aimed at assisting the sector had not yielded positive results thus far, the board added.

The top fruit harvest in the UK was set to begin in a few months, and it was hoped that the adverse climate conditions experienced in the last two years would not recur.

Bardsley England, a subsidiary of Camellia, was progressing with its plan to close its West Kent operations and relocate all packing activities to its Howfield property near Canterbury by August.

Following the termination of a supply contract with a key customer earlier in the year, Bardsley England was currently tendering its 2023 season fruit for other retail programmes and exploring export opportunities.

In Brazil, the soybean harvest was slightly ahead of last year's figures, and South Africa enjoyed a record year in its wine grape harvest, Camellia added.

Finally, looking at costs, the company said its global operations were still being affected by the ongoing war in Ukraine, particularly in terms of energy and fertiliser costs.

The company also noted a trend where some governments were imposing arbitrary wage awards for political expediency, purportedly without fully understanding the implications.

“It was announced earlier this week that the Group had entered into an agreement for the sale of all the group's shares in BF&M for a price of $100m, subject to regulatory and tax approvals,” the Camellia board noted in its statement.

“Although it is likely to take some time for such approvals to be secured and the exact use of proceeds may vary depending on circumstances between now and completion, the funds realised together with the proceeds from the sale of other non-core assets will give considerable financial strength to the group and allow it to accelerate its policy of diversifying its agricultural operations by crop and geographical location.

“The objective of disposing of non-core investments is, with this latest development, well under way.”

At 1326 BST, shares in Camellia were up 2.31% at 6,215.38p.

Reporting by Josh White for Sharecast.com.