Health company Comvita has delivered a strong first-half result and upgraded its guidance for sales, prompting a positive reaction from investors when the market opened.
The company reported operating earnings of $10.2million for the six months ended September, up from $201,000 in the previous corresponding period.
The reported profit of $3million was a major turnaround from the loss of $3.3million reported in the previous corresponding period.
Revenue was up nearly 53% to $91.1million from $59.6million in the previous period.
The company upgraded its full year guidance for sales to between $190million and $200million and operating earnings to between $32million and $35million.
Comvita will pay a 6c-per-share dividend on November 27, up from a 4c dividend in the year-earlier period.
Craigs Investment Partners broker Chris Timms said while the management commentary did not explicitly bridge the materially improved first-half performance, his understanding was the weak pcp and the weak first half in 2014 both suffered from insufficient stock on hand at year-end to support the first-half sales growth.
It was also over a period where accounting standards required Comvita to recognise a greater proportion of its beekeeping/supply costs for the full year.
The likely reaction from investors would be positive, albeit the strong share price performance in the year to date (up 88%) was already anticipating stronger sales momentum and an earnings upgrade, Mr Timms said.
The shares jumped 7.2% to a record $7.45.
Comvita chief executive Scott Coulter said sales had been driven by strong growth in all markets, made possible by strategic investments in supply security, better channel management and growth in sales of the Winter Wellness and fresh Olive Leaf categories.
Comvita had recently completed a five-year strategic review, reinforcing company commitment to a strong focus of optimising returns from individual markets and product ranges, increasing activity in the strategic ownership of raw material inventory and building on its innovation.
The recent strategic investment in listed company SeaDragon would provide sustainable New Zealand-sourced Omega 2 fish oils, he said.
