Dried fruit maker Murray River will miss its harvest target for the second year in a row
Food & Agriculture
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For the second year in a row Murray River Group looks set to miss its harvest targets — kicking off another round of write downs and profit warnings.
Shareholders have today dumped the troubled stock, sending it from 33c to 25c. The shares were down 18 per cent at 27c just after 1pm AEST.
With over 90 per cent of the dried vine fruit harvest complete, Murray River (ASX:MRG) expects to fall short of its estimates because some farms are reporting smaller sized fruit.
There has also been a significant change between the mix of fresh grapes and dried vine fruit — more of the lower-priced latter — in fiscal 2018, compared with pre-harvest forecasts.
Another year, another loss
Murray is expecting to make an EBITDA earnings loss of up to $28.9 million.
Its’ writing down last year’s left-over stock by another $1.7 million, because customers are saying they want product from the latest harvest.
And sales are down, expected to be $67 million to $70 million.
Exports suffered because of the low quality 2017 harvest. They were late to the game with fresh grape customers meaning they now have to sell the 2018 harvest as dried fruit in 2019, and the long-discussed high-value ‘Cluster’ sales growth hasn’t eventuated.
The half year loss was $22.2 million.
In April, new chairman Andrew Monk promised it was safe for shareholders to uncover their eyes after a year of turmoil and profit and inventory downgrades.
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He’s right — in that the harvest was better than 2017’s.
In May last year wet and cold weather meant they had to slash EBITDA earnings forecasts of $15.9 million in half and profit from $6.6 million to less than $1 million.
That led to a series of ASX queries as to when the company knew the harvest had been decimated, the forced exit of the founders and than a boardroom battle that saw them regain control, before selling out.
“It is anticipated there could be a further impairment in the FY18 year-end accounts however it cannot be quantified until impairment testing is completed,” the company said.
New boss has her work cut out
New CEO Valentina Tripp is now tasked with stripping $5 million in costs out of the company by June next year, and is refocusing international dried fruit sales on Vietnam, Japan, China and Korea.
The new high-speed snack-packing line, which has suffered delays, is expected to be operational by June this year.
“While it is regrettable that the company finds itself in a position where earnings are below expectation, we cannot sit and wait for conditions to improve,” Ms Tripp said.
“Decisive, immediate action has commenced to start restoring shareholder value, and we are confident that the plan we have in place will deliver results.”
