Financial and market update from Select Harvests

Select Harvests acquire Piangil Almond Orchard for $129 million

“91% of hulling and shelling of the Select Harvests 2020 crop is completed, with the remainder expected to be completed by mid-October. I am very pleased to advise the 2020 crop volume has increased to greater than 23,250 MT, up on the 2019 crop of 22,690 MT. With sales nearing completion, the 2020 crop pricing (including internal sales) will remain as previously advised in the range of A$7.25 - A$7.75/kg. COVID-191 has caused market access interruptions, however, momentum has increased in the last month,” Select Harvests Limited Managing Director, Mr Paul Thompson said. 

For the year ended 30 September 2020 Select Harvests expects EBIT to be in line with consensus.

Almond market conditions
The 2020 Objective Crop Estimate for the US almond crop was 3.0 billion lb (1.36 million MT). Due to weather conditions, the US harvest commenced early. Crop receipts are up 36% vs the same period last year and initial indications are sizing is generally smaller. The August 2020 Almond Board of California Position Report released on 12 September 2020 shows global demand is rebounding. 

August US crop shipments of 193 million lb were up 31% on August 2019. August Export shipments were up 49%, US domestic shipments were up 6%. Forward crop commitments (crop sold, not yet shipped) were up 88% (494 million lb). Comparatively, the total Australian crop is forecast to be 234 million lb.

The Californian crop is 37% sold (shipments + commitments) compared to 29% sold at the same time last season, buyers are taking advantage of lower prices. We expect consumption will continue to grow as distribution channels return to normal. 

The Australian Almond Board’s July 2020 Export Position reported shipments were down 37% on the same period last year. This shortfall can be largely attributed to the disruption to market access caused by COVID-19.

Select Harvest 2021 outlook
Commenting on SHV's 2021 outlook, Mr Paul Thompson said “Pollination is complete. We are now at the fruit sizing stage in the horticultural cycle. Tree health and crop outlook is positive. Recent rains have resulted in higher annual water allocations and lower water
market pricing. At this early stage, the outlook for the SHV 2021 crop is positive.”

Select Harvests has been acquiring lease and temporary water in recent months given the favourable water pricing environment. Together with its current water  portfolio and the 1,877ML high security water acquired with the Piangil Almond Orchard acquisition announced today, Select Harvests remains within its water strategy without the need to acquire additional high security entitlements.

“The Food Division continues in a challenging Australian domestic market that has seen a shift from the Food Service segment to the Retail segment. We have continued to invest in the Sunsol and Lucky brands and have just ranged 6 additional Lucky cooking products in
Woolworths nationally.” 

The Thomastown production, office and warehouse lease expires on 30 June 2020. Management is currently undertaking a comprehensive review of the food division. This review covers both strategic growth options and supply chain to support the various options under consideration. This review is expected to be concluded within the next quarter.

For more information::
Paul Thompson
Select Harvests Limited
Tel: +61 03 9474 3544 

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