7th May 2020 18:37
(Alliance News) - Camellia PLC on Thursday reported a drop in annual earnings after the agriculture and food service provider said a global over-production of tea put pressure on prices.
"In previous years we have talked extensively about the need to diversify our portfolio of businesses, particularly in Agriculture, and to ensure that we are as efficient in our production methods as we can be. The need for this diversification has never been more evident than in 2019, which saw the year open with an over-supply of tea in the market causing prices to fall and from which they never recovered," said Chair Malcolm Perkins.
For 2019, pretax profit fell to GBP22.3 million from GBP52.5 million in 2018, on revenue which fell to GBP291.5 million from GBP309.8 million.
Underlying pretax profit from continuing operations was down 58% to GBP16.1 million, reflecting poor tea prices experienced throughout the year.
Camellia declared a total dividend of 42 pence, down sharply from 142p in 2018.
The company said the coronavirus outbreak and the economic fallout arising from it is affecting all businesses to some extent, but the ultimate impact will not be clear for some months yet.
As a result of the coronavirus outbreak and the uncertainty it will cause on the business going forward, the company has decided not to recommend any additional dividends until it gets clarity on the situation.
Camellia said that once it has clarity it will declare a special dividend alongside the interim dividend.
Perkins said: "The group is set up in a way that reflects our long-term approach, with financial stability and sustainability being at the heart of our philosophy. The current situation with regard to Covid-19 is unprecedented not only in its severity but because we cannot tell at this stage for how long it will last nor what the implications will be. However, for now, our agricultural operations, with the exception of India, are producing as expected and our non-agricultural businesses continue to trade, albeit some at a significantly reduced rate. The overall impact on prices for our crops will not be known until later in the year.
"We remain ï¬nancially strong, with signiï¬cant net cash, and have the resources to withstand a period of disruption. The demand for our agricultural produce will remain and we are managing the business in a pragmatic manner which we believe will ensure our future prosperity whilst taking the necessary steps to manage our costs and spending in the short term."
The stock closed down 1.7% at 7,300.00 pence on Thursday.
By Arvind Bhunjun; [email protected]
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