HONEY manufacturer Capilano (ASX: CZZ) has delivered a solid net profit of $10.3 million (up 9 per cent on FY16) despite a shaky domestic honey market, operational costs and research and development into new products.
Total revenue dropped slightly to $133 million and was impacted by marketing costs associated with its new Beeotic honey product which hit shelves in September 2016.
A change to honey net pricing with a key customer also took a $3.4 million toll on the company's revenue and EBITDA results.
Despite these increased costs, Capilano remains in an optimistic position after it launched two new joint ventures which helped boost the CZZ portfolio by $6.57 million.
In July, Capilano sold its manuka beekeeping assets to Medibee Apiaries as part of a 50:50 joint venture with Comvita Limited.
In the same month, it also bought 50 per cent of the share capital in Western Honey Supplies and established a 50:50 joint venture with the Western Australian honey producer.
Capilano managing director Benjamin McKee says the company has been a key buyer of pure Australian honey in the past year and it is gearing up for an even bigger FY18.
"Capilano has again been the largest and most active purchaser of pure Australian honey over the last 12 months," says McKee.
"The improved rain patterns in key production areas has led to a notable increase in honey supply in recent months, with our largest ever winter supply for many, many years.
"Weather permitting, we remain very optimistic of the potential for increased honey production in the coming season from spring 2017."
Capilano declared a dividend of 40 cents per share on 23 June, which it paid out in late July.
CZZ stock opened at $16.50 this morning and at the time of writing (10:54am AEST) fell slightly to trade at $16.23.
Business News Australia
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