Floods and ‘record low’ almond prices wipe -$26M off Select Harvest’s 1H FY23 earnings

Shares for ASX-listed Agribusiness smallcap Select Harvests (ASX:SHV) has flagged revenue downgrades ahead of its 1H FY23 report.

In short, the company expects earnings to be -$26M lower than forecasted in its FY2022 financial statement.

In that latter document, published last November, the company saw a fair value inventory sales price of $6.80kg. 

The company now perceives a low-end ‘worst case’ estimate of $6.15kg.

What gives? 

Two big problems are affecting Select Harvest’s books right now: 

• Flooding on the east coast wrote off substantial portions of the 2022 almond crop and caused “minor tree losses”

• Management flags that global almond prices are declining

A curse upon your crops 

East coast flooding not only wiped out parts of Select’s 2022 almond crop but also led to a decline in the overall grade of produce. 

“The wet harvest required mechanical drying of a large portion of the 2022 crop and consequently, a higher percentage of inventory is of manufacturing grade quality,” the company wrote. 

It added the quality of the 2022 crop was the worst in 10 years. 

“Record low” almond prices

Management has also cited “record low” almond prices on global markets right now, elaborating that “global market pricing remains at near historic lows.” 

“While global market pricing remains at near historic lows there are positive signs emerging,” Select Harvests chief Paul Thompson said.

Always curious at Market Index, we reached out to Select Harvest's team for an in-depth explainer on this, but did not receive any information before deadline. 

“November shipments from the Australian Almond Board position report were strong,” the company added. 

The what? 

The Australian Almond Board is not actually a government body, as the name infers. It is the re-branded name of private peak industry body Australian Almonds. 

The company sees future demand uptick for almonds from a reopening China, and has also observed that Indian and Middle Eastern buyers are becoming more of a familiar sight. 

“The peak of the recent floods has passed. All our orchard operations are focused on our pre-harvest programs. There was no significant damage from the floods, but some minor tree losses occurred due to orchard inundation,” Thompson added.

Want to know more? 

Market Index provides free company information for Select Harvests (ASX:SHV) and all other companies on the Australian Stock Exchange. 

First-stage observations can be made about SHV by potential investors or analysts, including but not limited to: 

• Share price $4.06* 

• Market cap $491m* 

• 120.9m ordinary shares

• One year returns -24.6%

• Year to date performance up 4.1%

• Average 4 week volume of 188,004 shares 

• Ranked 21 of 96 consumer defensive sector companies

• Eight brokers rank SHV a “Buy”, one says “Hold,” and one “Sell” 

*As at 1320 AEST Friday 27 January 2023

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