Select Harvests (ASX:SHV) share price falls on plummeting profits

The Select Harvests (ASX: SHV) share price is down 2.6% today after the company posted a 93% drop in net profits.
The post Select Harvests (ASX:SHV) share price falls on plummeting profits appeared first on The Motley Fool Australia. –

The Select Harvests Limited (ASX: SHV) share price is sliding today after the company released its results for the 6-months up to 31 March 2021.

At the time of writing, shares in the fruit and nut grower are trading for $5.80 each – down 2.68%. By comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) is 0.84% higher.

Let’s take a closer look at the numbers and what they mean for the Select Harvests share price.

Select Harvests share price falls with profits

For the first half of FY21, net profit after tax collapsed 92.7% from the prior corresponding period (pcp) to $1.27 billion. Total revenue actually increased 37.4% to $84.8 billion in the period.

Cost of sales, however, shot up 71.8% at the same time. Select Harvests attributed the rising revenue to more crop harvests (and therefore sales). At the same time, the company claims the increase in costs outpaced revenue because of higher water rights prices. Water rights prices are lower this year and the company expects this to flow through to the next financial report.

In today’s release, Select Harvest was also pessimistic about the future prices of almonds, its main product. The company says almond prices are set mostly by output from California. It is expecting supply from the state to increase into the next year, thus hampering the almond price.

The price of almonds was already down 20% on the pcp to $6.00 a kilogram.

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) are down 62.9% on the pcp to $12.8 million. Earnings per share (EPS) sunk 94.3% to 1.1 cents and, unsurprisingly, no interim dividend was paid.

Management commentary

Select Harvests managing director Paul Thompson said of today’s results:

As anticipated, lower global almond prices have negatively impacted earnings, delivering a first half financial result well below recent prior periods.

With a record breaking 2020 Californian crop and a USDA Subjective Almond Estimate indicating another large crop this year, we are anticipating low levels of pricing for the remainder of 2021.

Looking forward to the 2022 crop, our tree health remains good with strong 2021 vegetative growth and high bud load. Water prices are expected to remain relatively low given current weather forecasts and storage levels. Global demand for almonds continues to increase at a steady rate, as plant-based protein consumption grows in all markets.

Select Harvests share price snapshot

Over the past 12 months, the Select Harvests share price has decreased 11.42%. Before the COVID-induced market sell-off of March 2020, company shares ended a trading day as high as $9.18 at the beginning of that year.

Given its current share price, Select Harvests has a market capitalisation of $679 million.

Learn where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of May 24th 2021

More reading

ASX 200 up 1.1%: Tabcorp receives $4bn offer, KKR wants Link’s PEXA business

Tesla Model 3 losing top safety designations

Why is the Cann (ASX:CAN) share price tumbling today?
Can the Telstra (ASX:TLS) share price keep climbing?
Why GameStop stock is still wildly overpriced

The post Select Harvests (ASX:SHV) share price falls on plummeting profits appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!