Following January’s profit warning, Asian Citrus Holdings (ACHL) revealed an interim operating loss of ¥544m (£53m), against a profit of ¥218m for the 2012 half-year. A poor winter harvest and lower selling prices constricted revenues and margins, but it was a ¥583m fair-value charge on the group’s orange groves that pushed China's largest orange-plantation owner into a net loss, forcing it to can the interim dividend.
Adverse weather conditions and the ongoing replanting programme at the Hepu plantation combined to reduce total orange production by 8 per cent to 147,927 tonnes. Yields at Hepu were down by a quarter on 2012, squeezing margins. The situation at the large Xinfeng plantation was even worse. Xinfeng contributed just over half of total revenues, but production was hit by “persistent heavy rainfall”, which washed away nutrients and forced it to use more fertilisers and pesticides. The gross margin at Xinfeng consequently collapsed from 33 per cent last year to just 3 per cent.
The margin squeeze will continue in the short term. Announcing he would be stepping down as chief executive, founder Tony Tong acknowledged that “a higher level of direct costs is expected to be incurred in the short term to alleviate the leaching of soil nutrients”. Asian Citrus’s shares fell around 6 per cent in morning trading.
| ASIAN CITRUS HOLDINGS (ACHL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 14p | MARKET VALUE: | £173m | |
| TOUCH: | 13.8-14p | 12-MONTH HIGH: | 36p | Low: 13p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | na | |
| NET ASSET VALUE: | ¥6.02* | NET CASH: | ¥2.1bn | |
| Half-year to 31 Dec | Turnover (¥m) | Pre-tax profit (¥m) | Earnings per share (sen) | Dividend per share (sen) |
|---|---|---|---|---|
| 2012 | 892 | 218 | 17.4 | 3.0† |
| 2013 | 748 | -544 | -44.5 | nil |
| % change | -16 | - | - | - |
Ex-div:- Payment:- *Includes intangible assets of ¥1.2bn, or 97 sen a share. £1=¥10.2 (¥1=100 sen) †Excludes a special dividend of 2 sen | ||||
