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Camellia scalded by pricing pressures

Weak tea prices persisted across 2019, boiling over into 2020.
May 11, 2020

Agricultural producer Camellia (CAM) was facing difficulties before Covid-19 arrived amid an oversupplied global tea market and sustained weak tea prices last year. The group’s underlying pre-tax profit more than halved in 2019, dropping from £38.1m to £16.1m.

IC TIP: Sell at 7,200p

This year’s outlook doesn’t look much better with tea prices in the first quarter characterised as “exceptionally poor”. Coronavirus disruption could lift prices amid reportedly higher demand and constriction of supply as producers are unable to operate at full capacity. While Camellia says most of its agricultural operations are working “as close to normal as is possible”, operations in India are being impeded. Social distancing means some tea estates there are using as little as 25 per cent of their workforce and the group expects to lose the majority of its ‘first flush’ of tea – Darjeeling’s first harvest of the spring is typically higher quality and more valuable. If restrictions continue, a “significant portion” of the second summer flush could remain unplucked as well.

CAMELLIA (CAM)   
ORD PRICE:7,200pMARKET VALUE:£ 199m
TOUCH:7,152-7,248p12-MONTH HIGH:11,191pLOW: 6,250p
DIVIDEND YIELD:0.6%PE RATIO:24
NET ASSET VALUE:14,337pNET CASH:£69.5m*
Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201524524.050.7129
201625826.5-387130
201729827.6862135
201831052.5912142
201929222.330142.0**
% change-6-58-67-70
Ex-div:na   
Payment:na   
*Includes £13m in lease liabilities, **No final dividend declared