Ann: Dividend/Distribution - CZZ, page-4

To justify a higher share price CZZ needs to increase earnings.

For the first few years earnings grew rapidly, for a few reasons.

1, The went from being a co-op with a goal of paying high honey prices to Members to being a public company looking to make a profit from int operations.

2, There was a Honey shortage, which crippled its main competitors for a while.

3, They bought 2 additional packing plants, which improved efficiency and lowered transport costs.


So number 1 & 2 have played out, Packing plants are currently operating efficiently and making profits, So the large gains from rationalising those assets has been done.

To increase profits of the packing operation would need to increase market share or pack higher value products, but the other competitor has recovered from the shortage so market share increase is not likely, however higher value products is still possible.

The other Dark Horse is the recent investments into Honey Production, eg owning Bee hives, This has been a significant investment in recent years but as yet has not beared much fruit, mainly because the operation has be focused on expanding hive numbers rather than delivering saleable honey.

But if the honey production businesses end up delivering good profits, we may see good growth in earnings per share, So for me its a wait and see game at the moment.