26th Feb 2015 10:55
LONDON (Alliance News) - Asian Citrus Holdings Ltd Thursday swung to a gross loss in the first half of the year, hit by a significant drop in revenue, largely due to lower orange production following damage to its plantations from two typhoons during the period and the infection of its orange trees with the citrus canker disease.
The Chinese citrus fruit producer reported a gross loss of CNY132.9 million for the six months to end-December 2014, compared with a gross profit of CNY98.8 million the year before, as revenue declined 22% to CNY584.4 million from CNY748.3 million last year.
"This primarily reflected the reduction in production volume and average selling price of winter oranges, as well as higher direct costs, such as fertilisers and pesticides, as we sought to mitigate the impact of adverse weather conditions both on crops and on the leaching of nutrients from the soil," the company said in a statement.
However its pretax loss for the period was CNY235.3 million, smaller than the CNY543.7 million loss it reported the year before, primarily as a result of significantly lower loss in the fair value of biological assets of CNY40.0 million, compared with CNY583.0 million in 2013.
Asian Citrus already warned last month that its first-half profit and revenue would be lower than the year before, due to a poor winter orange crop.
During the period, the company's Hepu plantation faced extensive damage after being hit by two typhoons, while production was also hit by what it said was "unfavourable weather" in Xinfeng, northern Taiwan, in 2014.
Total orange production decreased by 25% to 110,993 tonnes.
"Over the last two years, the inclement weather and persistent heavy rainfall has caused significant leaching of nutrients from the soil in Xinfeng Plantation, and the impact of Typhoon Rammasun prolonged the susceptibility of the orange trees to both citrus canker infection and soil leaching in Hepu plantation," the company said.
Citrus canker is a disease that causes lesions on the leaves, stems and fruit of citrus trees, which is not harmful to humans but means the products become unsightly.
Asian Citrus said that as a result, it expects to incur high levels of direct costs in the short term. It also said that the weak condition of its orange trees will take a number of years for harvests at its Hepu Plantation and Xinfeng Plantation to fully recover to previous levels.
"While it is still early in the financial year to fully judge the materiality of the challenges highlighted above to the group's likely full-year performance, we anticipate that conditions in the second half will continue to be demanding," it added.
Asian Citrus shares were trading 0.6% lower Thursday mid-morning at 7.42 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
ACHL.L