Harvest volumes were up significantly, but almond grower and processor Select Harvests has halved its profit in 2019-20, posting an after tax net profit of $25 million, down from $53m.
Extreme water costs during drought conditions in the first half of last financial year combined with lower global almond prices and strong competition from supermarket private label products to chew into Select's financial results.
Select's almond price payments were down 12.8 per cent from an average $8.60 a kilogram in 2018-19 to $7.50/kg in 2019-20.
That was well below the $7.95/kg average for the past five seasons.
On a positive note, however, global demand has lately responded strongly to historically low almond prices, and the US has booked record monthly shipments to key world markets.
Although Select Harvests enjoyed strong domestic and overseas demand from food manufacturers and the confectionary market for industrial value-added almond products in 2019-20, the extra orders were not enough to offset higher commodity input costs booked by its food division and growing private label penetration in the retail branded nut category.
Some export shipments were delayed by the coronavirus pandemic, which subsequently pushed customer payments into the new financial year.
However a big harvest was a highlight of the past year, resulting in a record 23,250 tonne crop - up from 22,690t - thanks to the good growing conditions.
Managing director Paul Thompson said there were plenty of internal achievements to counter the external market and price challenges.
The company retained its ranking as one of the lowest cost almond producers, despite the 40pc jump in absolute water costs caused by near record water prices in the Murray Darling basin.
Water represented more than half of the company's 13.3 per cent rise in costs per kilogram of total production.
He said Select's carefully balanced water entitlement ownership and leasing strategy protected the company from experiencing the full heights of spot water prices.
Australia's biggest almond business had enjoyed higher yields from its mature and immature orchards and benefitted from crop monitoring technology and more frost fans installed on its holdings to mitigate frost damage to trees.
Better rainfall and a swing back to long term average water prices in 2020-21 had also allowed the company to acquire leased and temporary water at favourable market rates.
Consumer demand up
Almond ingredient sales for industrial consumers which accounted for more than a quarter of Select's almond production, grew 19pc, while sales of the company's Sunsol brand grew 45pc.
"Consumer demand for healthier food products is growing in Asian markets, with these markets remaining a focus for Select Harvests," Mr Thompson said.
"However, our market development was held back in the second half of 2019-20 due to COVID-19 related travel restrictions."
Select Harvests' next crop will begin harvest in February.
Mr Thompson said taking into account the latest upbeat US sales trends, he expected a more definitive market and pricing environment emerging by April in time to support Select's next marketing campaign.
A four cents a share final dividend will take Select Harvests total fully franked payment to shareholders for the past financial year to 13c/share.
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