Select Harvests updates on almond harvest; to sell over 60% of FY19 crop

  • May 02, 2019 AEST
  • Team Kalkine
Select Harvests updates on almond harvest; to sell over 60% of FY19 crop
Select Harvests Limited (ASX: SHV) is an ASX listed company operating in the consumer staples industry, based in Melbourne, Australia. The company is one of Australia’s largest almond companies which imports a full range of nuts and a wide range of other ingredients for inclusion in their consumer products range. It has a primary Almond processing facility in Wemen, North West Victoria and the second processing, value-adding and packing facility situated at Thomastown. On 2nd May 2019, the company provided its crop update, after the conclusion of the company’s 2019 almond harvest. Crop update The company had previously disseminated, that the presence of dry harvesting conditions, use of new technology and improved horticultural practices have helped to grow a relatively high-quality crop, with a lower percentage of manufacturing grade material. The new processing technology has been utilised within the orchards and the Carina West processing facility which has improved the productivity of the crop. The company has also been working to forward purchase all its water requirements for the current year’s crop, due to annual water allocation pricing and availability challenge being faced by it. In the previous crop update (announced on 1 April 2019 the company stated that the water cost had increased significantly, and higher prices would lead towards a negative impact to the crop result, but it was likely to be more than offset by assumed improved yields and higher almond prices. The company had also been able to expand the crop’s volume as compared to the last year period where similar conditions prevailed, mainly through its investment in risk mitigation, especially frost fans. Out of 48% of the total crop processed, the company has been able to reach all the regions, producing yields of at least 10% more than the industry benchmark volumes in all the varieties. Market Condition Both the local and international demand of the crop continued for inshell, processed and kernel almonds. The Australian and US sales commitments for the current crop is in line with market expectations and stable prices, post the announcement by industry sources of the anticipated US 2019 crop estimated to be between 2.50 - 2.70 billion pounds. Further, the company has committed to sell over 60% of the crop produced in 2019. It also aims to hedge over 72% USD. SHV anticipates the average price for FY2019 to be in the range of A$8.40 - A$8.70 per kg (as provided previously). Key personnel’s statement The Managing Director of the company, Paul Thompson stated that the current crop yield is expected to surpass 10% above the industry standards across all regions, which makes it one of the best crops yield in many years from the quality perspective. He further added that the company had invested quite a lot in risk mitigation strategies, horticultural program, processing technology, greenfield plantings and its employees. The benefits of the above-mentioned factors have been evident in the yield, crop quality and financial returns. On 22nd February 2019, the company released its annual general meeting (AGM) presentation, in which it discussed almond and food division. Technical Outlook The stock of the company closed the trading session at A$6.78, up by 5.28% compared to the previous closing of A$6.44 (as on 2nd May 2019).

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