- Shares close 6.6 pct lower
- Net profit NZ$18.5 mln in 15 months ended June
- Profit in 12 months ended March was NZ$17.2 mln
- Beijing clamped down on cross-border e-commerce in April
- 'Uncertainty' on China re-export distribution channels-CEO
(Recasts, adds shares, comment from analyst)
New Zealand honey supplier Comvita Ltd (CVT) said on Tuesday demand from China was waning, hit by a Beijing crackdown on cross-border e-commerce that has dented global consumer goods makers' plans to tap the giant mainland China market.
Comvita's warning on softening trade in a key market sent its shares sharply lower as the firm reported earnings showing an April-June profit slowdown. The stock finished 6.6 percent lower at NZ$9.89, its lowest close since late March.
The company, which has changed its fiscal year to align with food production cycles, said net profit in the 15 months ended June 30 was NZ$18.5 million ($13.5 million). That was well up from NZ$10.2 million in the 12 months to March 2015, but only slightly more than an unaudited NZ$17.2 million profit it previously reported for the year through March 2016.
Comvita Chief Executive Scott Coulter said the slowdown was due to a "reduction in growth in the Chinese economy itself, as well as the introduction of a number of new regulations...that have created uncertainty in the re-export market distribution channels out of New Zealand and Australia."
Beijing's April move to clamp down on cross-border e-commerce with higher taxes and import restrictions has clouded prospects for both companies selling direct themselves and China's informal army of overseas shopping agents who ship goods back to the mainland.
Much of the rise in profit in the 15-month period was due to a boost in honey sales, particularly via China e-commerce, the company said. Comvita sales rose just over 33 percent on Chinese e-commerce platforms over the 15 months, the company said.
"Some of the commentary around demand out of China having slowed will be weighing on the market," said Forsyth Barr analyst James Bascand, referring to the share price drop. He said the tighter Chinese e-commerce regulations, coupled with a higher tax, will have had an impact.
Comvita CEO Coulter acknowledged that Chinese regulators have recently increased their oversight and auditing of the New Zealand honey and wine industries, but said this was a positive move overall.
"The proposed changes... will support the price premiums we expect from having world-class quality standards," Coulter said.
($1 = 1.3661 New Zealand dollars)
