REG - Camellia PLC - Trading Update

CamelliaAnnouncement

24/08/2022 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220824:nRSX9903Wa&default-theme=true

RNS Number : 9903W  Camellia PLC  24 August 2022

24 August 2022

Trading Update

Camellia Plc

Camellia Plc (CAM.L) issues the following update on trading for the year and
confirms the interim results release date.

Trading

Agriculture - Tea

Heavy monsoonal conditions across northern India and Bangladesh are continuing
to result in further reduced production.  In India, lower volumes have
resulted in improved pricing over the same period last year. As previously
announced, wage increases in West Bengal (effective 1 January 2022) have been
agreed at 15%, substantially higher than industry expectations.  Wage
increases for Assam have also now been agreed at 13% (effective 1 August
2022).  The benefit of higher prices is not currently expected to fully
offset the impact on profits of the reduced crop and higher wages.

In Bangladesh, the production impact from very wet weather and flooding has
been further exacerbated by strike action over wages by tea industry workers
during the last 10 days.  The wage increase has been mandated at higher than
expected levels of 20.8% (effective 1 January 2021) and the estates are slowly
returning to work. Although the most recent auction prices are above those of
last year, our average price to the end of July remains below that of the same
period last year.

Agriculture - nuts and fruits

Our macadamia operations continue to harvest and process their production with
volumes expected to be higher than last year. Although the kernel market is
reasonably active there remains a large inventory of smaller style product
carried over from prior seasons which is impacting on average prices in the
market.  With China still enforcing lockdowns, the level of demand has not
recovered in that market and demand in the USA and Japan, although improving,
is still subdued. Pricing, particularly for commercial grades, continues to be
under pressure with no sign of recovery for the current season.

The Hass avocado season is well underway, with indications that volumes will
be above those of last year. Thus far logistics have generally worked well
despite the challenges presented post pandemic.  Pricing in H1 2022 for the
limited sales of estate Hass made in the period has been below that of the
same period of last year.  While prices in the market in recent weeks have
improved considerably it is difficult to predict pricing with any certainty
for the remainder of the season in what is a well-supplied summer market in
Europe.

Other Investments

AJT Engineering continues to face challenges due to supply chain delays which
are impacting on production scheduling and hence profitability.

BF&M, our 36.9% owned associate, has issued its half year results for 2022
which, disappointingly, show a shareholders net loss after tax for the period
of Bermudian dollar 12.3 million (H1 2021 - profit after tax Bermudian dollar
14.8 million).  Camellia's share of the results of BF&M for H1 2022 is a
loss of £4.6 million (H1 2021: profit £6.4 million). BF&M's H1 2022
results were negatively impacted by the requirement to mark investments to
market value with movements being taken through the income statement. Net
income from operations after excluding the negative fair value movements in
investments was Bermudian dollar 4.3 million versus Bermudian dollar 13.3
million in the first six months of 2021. Losses in Q2 have continued to be
driven by factors previously announced on 30 June 2022 including rising
interest rates and stock market volatility. Gross premiums written for H1 2022
increased by 6% from the prior year driven by increased property premiums and
new business. The Life, Health and Pensions-related businesses experienced
higher than anticipated claims costs and lower underwriting results. Higher
reinsurance costs and a slightly increased incidence of property losses also
impacted BF&M's P&C business in the first half of the year.

Interim results

Camellia's results for the six months ending 30 June 2022 will be announced on
1 September 2022.

Outlook

As always, our financial results remain largely dependent on the Agriculture
division where the majority of harvesting, and hence sales, takes place in the
second half of the year. This year, the results of BF&M, where stock
market performance and the prevalence of hurricanes in the second half of the
year are critical, will also be a significant factor in our results. It is
therefore premature to provide a firm indication of the likely results for the
year.

However, if current trends continue and assuming a normal H2 for BF&M, the
impact of the matters set out above suggests that although revenue is expected
to be slightly above market expectations, the adjusted profit before tax* for
the Group for the year will be below market expectations but above that of
last year.

The Group's balance sheet remains strong with cash and cash equivalents net of
borrowings at 30 June 2022 of £37.1 million.

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No. 596/2014.

 

* adjusted profit before tax seeks to present an indication of performance
which is not impacted by exceptional items or items considered non-operational
in nature and for example it excludes impairment charges, gains/losses on
disposal of assets and restructuring costs.

 

Enquiries

Camellia Plc
 
                01622 746655

Malcolm Perkins, Chairman

Susan Walker, CFO

Panmure Gordon
                                     020 7886 2500

Nominated Adviser and Broker

Emma Earl

Erik Anderson

Maitland/AMO

PR

William Clutterbuck
                                      07785 292617

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTDZGZRLFVGZZM