CAM.L

Camellia Plc
Camellia PLC - Trading Update
6th June 2024, 06:00
TwitterFacebookLinkedIn
To continue viewing RNS, please confirm that you are a Private Investor*

* A Private Investor is a recipient of the information who meets all of the conditions set out below, the recipient:

  1. Obtains access to the information in a personal capacity;
  2. Is not required to be regulated or supervised by a body concerned with the regulation or supervision of investment or financial services;
  3. Is not currently registered or qualified as a professional securities trader or investment adviser with any national or state exchange, regulatory authority, professional association or recognised professional body;
  4. Does not currently act in any capacity as an investment adviser, whether or not they have at some time been qualified to do so;
  5. Uses the information solely in relation to the management of their personal funds and not as a trader to the public or for the investment of corporate funds;
  6. Does not distribute, republish or otherwise provide any information or derived works to any third party in any manner or use or process information or derived works for any commercial purposes.
RNS Number : 3086R
Camellia PLC
06 June 2024
 

6 June 2024

Camellia Plc

(the "Company" or the "Group")

 

Trading update

 

 

 

Tea

India: Production in May in all regions has been severely affected by very dry weather which is also expected to impact yields in June.  While there are some early signs that prices for Assam and Darjeeling teas may be improving, it is too early in the season to adjust our forecasts. In the face of a substantial tightening of regulations around the use of chemicals in the growing process, the India subsidiary companies have decided to materially reduce bought leaf production as a risk mitigation strategy.

 

Bangladesh: Following industry discussions with the Bangladesh Tea Board, a fair pricing mechanism is being developed with the objective of improving prices and margins for producers.  Other initiatives to support the industry, are also under consideration by government. While these are positive developments they are at an early stage and the scale of impact is not clear. 

 

Kenya: Favourable weather meant crops in May were higher than expected.  However, as mentioned in our annual report, significant stocks of tea have been building up in the Kenya industry over recent years.  With the revised minimum pricing mechanism, these are now being released to the market for sale with a significantly bigger impact on tea prices in the last month than expected.  It looks like these lower prices are likely to continue for the remainder of this year.  There is no obvious catalyst for prices to improve and in fact they may further weaken.  Estimating the scale of this and hence the impact on our prices is difficult at this early stage in the year.  The strength of the Kenya shilling remains a headwind.

 

Malawi: Weaker prices in Kenya have also impacted Malawi tea demand with further softening of prices in this market too.  Production volumes in Malawi remain in line with expectations. 

 

Other crops

Other crops are performing in line with the guidance previously given.

 

BF&M

As mentioned in the annual report, the disposal of our interest in BF&M to Argus Group has been more complex and the approval process more protracted than expected.  While we are still confident the sale of our stake will go ahead, further delays in the regulatory approval process mean we now expect completion in the latter part of 2024.  The sale of BF&M is expected to result in cash consideration of $100m payable to Camellia, before expenses.

 

Bardsley

Progress has been made in the closure of the Bardsley's operation.  We have now exited the two major leases and negotiations with the remaining landlords are ongoing. Asset disposals are also underway and we are on track to conclude the winding up process before the end of the year.

 

We expect to report a reduced loss for the year from Bardsley in the range of £3.5-4.5 million (2023: Loss £15.6 million). This includes the trading loss as well as the estimated cost of exiting leases, impairments, closure costs and the results of asset disposals. We expect a net cash recovery from the closure of £4-5 million. It is expected that Bardsley will be accounted for as a 'Discontinued operation' in 2024. 

 

Outlook for the year for continuing operations

Forecasting the outcome for the year at this stage in the year is difficult, not least because the majority of our production and sales occurs in the second half of the year. That said, despite reduced tea production expectations in India and further reductions in tea prices in Kenya and Malawi we continue to expect revenue above that of 2023. However, the outlook for the adjusted loss before tax for continuing operations has worsened from our previous guidance and is now at between £10-12 million (2023: £2.5 million loss).

 

Camellia had net cash of £21.7 million and investment portfolios with a market value of £38.1 million at 31 March 2024.

 

 

This announcement contains inside information for the purposes of the UK Market Abuse Regulation.

 

Enquiries

 

Camellia Plc                                                                        01622 746655

Byron Coombs, CEO

Susan Walker, Chief Financial Officer

 

Panmure Gordon                                                                020 7886 2500

Nominated Adviser and Broker

Emma Earl

Rupert Dearden

 

H/Advisors Maitland 

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 or visit 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.
 
END
 
 
TSTDZGGVVKKGDZM]]>
TwitterFacebookLinkedIn