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Highlights
- ArborGen Holdings has reduced its US GAAP EBITDA guidance range to US$11.3-11.7 million for FY22.
- Rainy conditions resulted in seedling inventory losses in the early season for the Group’s present production year.
ArborGen Holdings Limited (NZX:ARB), engaged in the forestry genetics business, provided a market update on Thursday. The Group stated that severe rain in the early and most vulnerable phase of seedling growth led to seedling inventory losses in the current production year.
ArborGen expects its US GAAP EBITDA between US$11.3-11.7 million for FY22, down from the previous projection of US$13-14 million. Extra rental income is likely to add a further $0.5 million on annualised basis when a new occupant is found.
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The Company confirmed that there will be nearly 25 million seedling losses. This is because it brought forward its regular November mid inventory count to get more prominence of the seedling crop available this year.
Some of the factors that played a part in the Company’s decision to lower its EBITDA guidance included the following:
- Projection of slightly lower sales volumes of OP seedlings in the eastern part of the market due to supply chain issues affecting customer demand.
- Anticipation of higher labour, fuel and material costs in H2 of 2021 due to inflation, which in turn will impact present year margins.
- Recognition of one-time charges of NZ$0.7 million relating to the expulsion of the defaulting sub-lessee at its headquarter premises and to previous year cost adjustments in Brazil.
- Expectation of lower rental income for the HQ premises because of interruptions in the eviction process.
On 28 October, at the time of writing, ARB was trading at $0.26, down 7.14%.
Bottom Line
In the US, ARB continues to be on track to deliver its highest MCP sales year in 2021.