Select Harvests soaring on bumper nut haul
Select Harvests’ shares are blooming after a successful year which the nut grower attributes to a bigger than expected almond crop, firmer prices, and the shrewd navigation of an expensive water market.
Shares in the horticultural firm climbed 11.2 per cent to a three-month high of $8.04 in the first 15 minutes of trade on Friday after it revealed a $53 million full-year profit and revenue of $298.5 million. The company’s stock was still 7.04 per cent higher at $7.75 by 1055 AEDT.
A switch to a September financial year-end means prior corresponding period figures were unavailable, but the company announced a fully franked final dividend of 20 cents, up from seven cents at the last full-year result.
The company’s 2019 almond harvest trumped the upgraded forecast that Select had set in August, coming in at 22,690 tonnes to beat guidance of between 22,200 to 22,500 tonnes. The firm said a higher yield, the installation of new frost-protection fans, and a $6 million sorting line also helped prop up the result.
Meanwhile, a lower than anticipated 2018 US crop, a lower Australian dollar and increased demand from China also led to an increased average market price of $8.60 per kilogram.
Select said it had weathered increased pressure around water costs and supply for its operations across the Murray Darling Basin amid an ongoing drought, lower annual water allocations, and an increased presence of sophisticated financial investors.
The company, which has largely acquired its full 2020 crop water requirements, also flagged its support for an ACCC investigation into the water market.
Select Harvest chief executive Paul Thompson said production would increase incrementally over the next three years, even as the company moves to cut its water usage.
“While water costs have reached near historic highs, our ownership strategy and prudent management of water purchases has meant Select Harvests will not be fully impacted by current pricing. Phytec technology has been installed and we are targeting an eight per cent reduction in water usage without adversely impacting yield,” Thompson said.
The company’s almond orchard portfolio is one of the largest globally and currently stretches across 7,696 hectares over three growing regions spanning southern NSW, northern Victoria and South Australia. The company said 35 per cent of its trees are yet to reach full maturity and will do so over the next six years.
The company also said it had improved its boiling facility to meet the growing export opportunities to countries such as China and India, as demand for healthier plant-based products and increasing affluence increases demand.