REG - Camellia PLC - Trading Update

CamelliaAnnouncement

06/06/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240606:nRSF3086Ra&default-theme=true

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 (mailto:rns@lseg.com)
 or visit
www.rns.com (http://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 (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTDZGGVVKKGDZM