Chief executive Scott Coulter told shareholders at today’s annual meeting the new strategy should start paying dividends in the current financial year. That includes splitting Comvita into two separate divisions, one focusing on supply and the other on branding and sales. The company hopes this will lower overhead costs for both divisions and provide a stronger outlook further out.

Sales into China via unofficial online channels known as daigou are tracking higher than a year earlier, but Coulter said protracted price negotiations kept a lid on that growth. Meanwhile, North American sales were slower due to excess supply from another New Zealand honey brand. 

Comvita changed tack in August after two poor honey harvests undermined earnings and its diversification into non-honey products didn’t stack up. The company wants to reduce agricultural risk with a more secure honey supply and target profitable business with its core products. That involves a shift to more temporary labour contracts, creating a more variable cost structure. 

Chairman Neil Craig noted the potential takeover bid during the year, saying the board couldn’t agree on a price after a profit downgrade in April. The directors decided to reject the offer at a lower price, having consulted Comvita’s founder Alan Bougen and its two largest shareholders – China Resources Ng Fung and Kauri NZ Investments. 

The board reviewed the business after the bid fell through, which led to the new strategy, Craig said. 

“This more focused direction will lead to a sharper focus on profit generation rather than revenue growth from a more diversified product strategy,” he said in slides accompanying his presentation. 

Comvita shares were unchanged at $6, having slumped 28 percent so far this year. 

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