The Select Harvests Limited (ASX: SHV) share price is up over 8% today following the release of the company's crop and market update. The harvest is progressing well and market demand remains strong.
2020 crop and market update
According to the most recent Australian January Export shipment report released by the Australian Almond Board, month on month shipments are up 40% while year to date shipments are up 26%. Work demand from major almond importers and domestic customers remains strong. Chinese customers have commenced production post the extended Lunar New Year closure as a result of coronavirus.
The Californian Almond Board has released the domestic and export shipment report for the August 2019 to February 2020 period, confirming the 2019 crop will be approximately 2.55 billion pounds. Month on month shipments are up 7.9% and year to date shipments are up 5%. Both domestic and export shipments for February 2020 were record results.
Select Harvests' 2020 crop is over 65% committed for sale at prices within the previously provided range of $8 – $8.50 per kilo. The company anticipates export shipments of the 2020 crop will commence within the next month.
Select Harvests advised that the 2020 harvest is progressing well. Approximately 40% of orchards have been harvested with completion expected at the end of April. 10% of the crop has been processed with the yield and quality profile similar to last year. Although it is too early to provide an accurate forecast, Select Harvests is optimistic about crop size and quality.
Select Harvests' business
Select Harvests is one of Australia's largest almond companies, supplying almonds domestically and internationally. Customers include supermarkets, health food stores, food manufacturers, and retailers.
The company is a fully integrated almond business consisting of orchards, processing, trading and consumer products. The company owns, leases, and also manages some orchards pursuant to joint ventures. It processes almonds by hulling and shelling, blanching, roasting, slicing, and creating almond meal. Select Harvests' brands include Lucky, Sunsol, and NuVitality, as well as retailer brands.
In Select Harvests' most recent results announced in November last year, the company reported a 159.8% increase in full-year net profit after tax (NPAT) which rose to $53 million from $20.4 million. Earnings per share increased 139.2% to 55.5 cents per share, as almond volumes increased by 44.5% and almond prices increased by 6.8%. The cost of production per kilo of almonds decreased 14.7% with the impact of increased water costs kept to a minimum.
Foolish takeaway
Conditions are looking favourable for Select Harvests with a promising crop and strong market demand.
