Anyone have any ideas on El Nino impact on CZZ profit over this year and next?
A few basic lines of thought -
- Drought conditions -> Reduced Oz honey supply
- Reduced Oz honey supply -> Higher Oz source costs -> Wholesale CZZ price increases sufficient to absorb higher costs? -> unlikely after last year - negative impact on NPAT
- Reduced Oz honey supply -> Need for imports to make up volume -> Higher import costs due to lower $A -> Wholesale CZZ price increases sufficient to absorb higher costs? -> unlikely, negative impact on NPAT
- Reduced Oz honey supply -> CZZ only supplier (?) with sufficient scale to meet volume via imports -> CZZ increased domestic market share -> increased domestic volume x lower margin on imports overall -> small positive to NPAT
- Lower $A -> Higher export revenue -> Sufficient to offset higher source costs? -> neutral NPAT
- Acquisitions -> Higher revenue at higher (manuka) margins -> positive NPAT
Anyone have anything to add more colour/substance to this?
That said, there were poor conditions last year and CZZ had a fantastic result. Ultimately, what pricing power does CZZ have as a supplier? It was good last year (they noted the increased pricing passed onto customers) but can they repeat it this year. Not sure they can but I could be wrong.
CZZ Price at posting:
$17.37 Sentiment: Hold Disclosure: Held
