Ann: FORECAST: CVT: Demand Fulfilment Challenges

• Release Date: 19/02/13 11:39
• Summary: FORECAST: CVT: Demand Fulfilment Challenges Prompt Revised Profit Forecast
• Price Sensitive: No
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CVT
19/02/2013 09:39
FORECAST

REL: 0939 HRS Comvita Limited

FORECAST: CVT: Demand Fulfilment Challenges Prompt Revised Profit Forecast

Global natural health and beauty products company Comvita is today lowering
its earnings guidance for the year to 31 March 2013 mainly due to industry
wide supply shortages and unexpected increases in prices for key ingredient,
Manuka honey, and more difficult trading environments in the United Kingdom
and Australia.

Comvita now forecasts net profit after tax (NPAT) of approximately $7m for
the year. This compares to our guidance in November 2012 at the half year
result, when we noted we were confident of improving NPAT year-on-year. In
the year to 31 March 2012, NPAT was $8.2m. We expect total sales for Comvita
for the full year to be approximately $100m, up 4% on the prior year.

The accumulated effect of two successive years of poor honey harvest for the
beekeeping industry, due to generally inclement weather, resulted in sharp
increases of up to 50% in the wholesale purchase price for Manuka honey
during 2012. The full extent of the increases in purchase price only became
apparent during the latter part of the year.

Relief, however, is in sight as the honey harvest for the current 2012/2013
summer season is shaping up to be above average.  At the same time, we have
increased the capacity of our recently purchased beekeeping operations
throughout the North Island to now produce approximately one third of our own
honey needs, enabling us to better manage costs of this key ingredient.

Trading in Australia and the United Kingdom has been difficult. The general
downturn in the economy and consumer confidence in these markets is resulting
in an increasingly competitive environment for our retail customers. While we
have been successful in pushing through price rises that better reflect the
raw material cost increases, this has resulted in a loss of sales with the
more price-sensitive trade customers.

In contrast, sales in our key Asian markets and in New Zealand have been
strong. Increased prices have been more readily accepted and growth of
Comvita's non-honey product range has been strong. This is consistent with
Comvita's strategic growth initiatives to sell a value-added brand in premium
markets and channels.

While we regret the need to downgrade the earnings outlook for this financial
year, we remain confident that the reasons for the downturn are isolated and
that mitigation measures are already in place. Most importantly, the current
strategy still holds with business on a path of strong earnings growth beyond
this financial year.

Comvita will release its results for the full year to March in late May 2013,
at which point we will provide a detailed update of progress in all our key
markets.

Ends....

For more information:

Brett Hewlett
Chief Executive
Tel: + 64 21 740 160

Neil Craig
Chairman
Tel: +64 21 731 509

Julie Chadwick
Communications Manager
Tel: +64 21 510 693

About Comvita (www.comvita.com)
Comvita is an international natural health and beauty products company with a
strong New Zealand heritage. We are committed to the development of
innovative natural health and wellbeing products, backed by credible
scientific research. We develop and manufacture products in the categories of
Health Care, Personal Care (Skincare and Wound Care) and Functional Foods
(Health Foods). Manuka (leptospermum) honey is at the core of the Comvita
product range and we are the largest manufacturer and marketer of this
uniquely New Zealand resource. We sell into more than 18 countries through a
network of wholesale and third-party outlets, more than 470 branded retail
outlets throughout Asia - including 400 stores in 40 cities in mainland China
and online. We have offices in New Zealand, Australia, Hong Kong, Japan,
Taiwan, South Korea and the United Kingdom
End CA:00233101 For:CVT    Type:FORECAST   Time:2013-02-19 09:39:09