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Camellia’s prices lukewarm

Benign weather conditions boosted production volumes and profits, but pricing pressures persist
April 12, 2019

Excluding released provisions relating to resolved wage and pension issues, Camellia’s (CAM) underlying pre-tax profit increased by 38 per cent to £38.1m in 2018. Within a unique blend of businesses includes engineering, food service and investments, agriculture is where most of Camellia's profits are generated. Comprising almost 80 per cent of group revenue, the segment trading profit increased by 43.3 per cent to £51m.

IC TIP: Hold at 10500p

“Ideal” weather conditions in Malawi and higher bought leaf volumes from the Indian Jogopur factory boosted overall tea production by 8.4 per cent to a record 103mkg. Average tea prices increased across most regions, but exceptional national output in Kenya meant auction prices fell below the cost of production.

Similarly, unprecedented volumes from competitors undermined record avocado production as average Hass prices plummeted by 40 per cent.

Agriculture aside, the group is continuing to refine its portfolio. Divesting three businesses and acquiring Black Gold Oil Tools, the engineering division narrowed its trading losses to £0.6m. Collectively, the UK businesses returned to profit.

House broker Panmure Gordon forecasts adjusted pre-tax profits of £22.5m and EPS of 317p this year, rising to £24.3m and 345p in 2020.

CAMELLIA (CAM)   
ORD PRICE:10,500pMARKET VALUE:£294m
TOUCH:10,400-10,700p12-MONTH HIGH:13,100pLOW: 9,100p
DIVIDEND YIELD:1.4%PE RATIO:12
NET ASSET VALUE:14,125p*NET CASH:£109.6m
Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201423917.2103126
201524524.050.7129
201625826.5-387130
201729827.6862135
201831052.5912142
% change+4+90+6+5
Ex-div:13 Jun   
Payment:12 Jul   
*Includes intangible assets of £9.5m, or 3.4p a share