Some negatives after reading the Annual report and Edison research
I've just read the Edison and Annual Report. Overall, I think the Edison report is a bit disappointing as it does not detail expected margin across the sectors. I think this is key to understanding FY15 profit estimates.
But a couple of things I have noticed that will affect FY15:
1.Forex. If current the current exchange rates remain the same, CVT will take a hit as exchange rates across the sensitive currencies are above FY14 average.
2. Other income. In FY14, Comvita received Other income of $2.8 Mill. Edison forecast this to be $1.5mill in FY15. Other income include "Change in fair value of biological assets and agricultural produce" and "Government Grants". Without this income FY14 would have been weaker than FY13. So the FY14 result really was quite poor.
3. Interest expenses are going to be bumped up by $1.3mill in FY15
4. Integration Costs of NZ Honey
So definitely some headwinds in FY15. The first half result has already been flagged as poor ... "We anticipate a bigger loss at half-year than last year but an increase in net earnings for the full year. "
I've been quite bullish on CVT in previous posts. I'm less so now.