Camellia hikes dividend after year of 'challenges'

31st May 2022 11:30

(Sharecast News) - Tea-focussed agriculture company Camellia reported revenue of £277.2m in its final results for 2021 on Tuesday, down from £291.2m year-on-year, as its average tea selling price was higher, while avocado volumes and prices fell.

The AIM-traded firm said its adjusted profit before tax was £8.8m for the 12 months ended 31 December, down from £16m year-on-year.

Its profit before tax was £7.1m, down from £7.8m, while it swung to a profit after tax of £4.5m from a loss of £0.8m in 2020.

Earnings per share came in at 83.3p, swinging from losses of 181p in 2020, while its total dividend for the year rose to 146p from 144p.

Operationally, Camellia said its average tea selling price was higher in 2021, but avocado volumes and prices were significantly down.

Profits from macadamia and its arable farm in Brazil were higher, although they were also "significantly affected" by strategic changes to the company's agriculture portfolio.

Apple producer Bardsley England was purchased at the end of July, where "significant steps" were being taken to restructure and cut costs so that the business could reach its full profit potential and also allow Camellia to reduce its high corporation tax rate.

In the comparative period, Horizon Farms in California, which generated £4.5m profit in 2020 but was subject to severe climate risk, was sold.

Profits from instant tea, branded tea and tea rooms improved, despite the continuing impact of Covi-19 lockdowns on demand for the company's Jing branded teas.

Camellia said it continued to invest to expand agriculture through crop and location diversification, including the purchase of Bardsley England, while it sold non-core loss making businesses including Abbey Metal Finishing, Atfin and BMT in the period.

The sale of other non-core assets was underway, the board said.

Camellia's board recommended a final dividend of 102p per share, which took the total dividend for the year to 146p.

It said its outlook for 2022 was "positive" overall, with both revenues and profits expected to be ahead of 2021.

"Camellia withstood a range of challenges in 2021, several of which were unprecedented," said chairman Malcolm Perkins.

"The combination of these and the long-term decision in 2020 to exit Horizon Farms in climate challenged California, and the purchase of Bardsley England in the UK in 2021 meant that group profit was significantly impacted.

"That said, the resilience and commitment of our people has enabled us to continue to focus on our strategy of expansion in areas of expertise while divesting non-core businesses."

Perkins said 2022 had started well with "good prices" being achieved in the Kenya tea market, and a "strong opening" for India and Bangladesh, although it was early in the season.

"The remaining crops are developing in line with our expectations for the stage of the growing cycle with volumes ahead of those of 2021.

"The impact of substantial rises in energy prices and in fertiliser costs is being felt across all our agriculture operations and we expect rising inflation to also lead to further increases in wages.

"Overall however, we expect higher profits in the year ahead."

At 0909 BST, shares in Camellia were up 0.84% at 6,000p.

Reporting by Josh White at Sharecast.com.