Clover ups revenue on the back of greater infant-formula market stability in China
Baby-formula nutritional oils encapsulater Clover Corporation (ASX: CLV) has increased half-year revenue 60 per cent to $31 million and half-year net profit after tax 209 per cent to $3.2 million after greater regulatory stability was experienced in China, increasing demand.
The company, which markets its oils under the NuMega Ingredients brand, increased its financial year 2018 first-half revenue by $21.6 million in the half-year ended 31 January 2018, when compared to its H1 FY2017 result.
Clover’s earnings before interest, tax, depreciation and amortisation were $4.7 million, a 176 per cent increase on the $1.7 million EBITDA it achieved for H1 FY17.
The company, which shared its half-year report and accounts with the Australian market today and summarised its results in an investor presentation, put the increase down to increased demand for its products.
Infant formula-focused Clover said in a statement to the Australian Securities Exchange the IF market continued to improve with little change to Chinese regulation in the past six months, allowing manufacturers confidence to deliver into the Asian republic’s market.
Tinned formula is delivered to China through bricks and mortar channels and the grey market, with Clover stating that most of the product that reaches these channels is manufactured in Australia or New Zealand.
Clover chief executive Peter Davey was pleased with the company’s results.
“It is pleasing to see the hard work paying off for the people working day to day in the business and the benefits they are providing for our shareholders,” Mr Davey said in the statement.
“It’s not one thing that delivers result, it’s the combination of effort across every segment of the business.
“The outcome is our ability to deliver great product consistently at a competitive price, winning us business and improving the bottom line.”
The company had operating expenses of $3.7 million in the half-year as it invested in people, technology, new products and sales.
A new product released to in the first half aimed to develop additional market segments for gummies containing omega-3 oils.
Inventory was a flat $18.5 million, on H1 FY17.
The company has also recently bought its Altona, Victoria manufacturing site, and its consolidating its Victorian operations at the site.
The company used its announcement to share its view its order patterns for the second half of the 2018 financial year were likely to be consistent sales experienced in H1 FY18.
Clover credited its current results to business improvement efforts made over the past three years, to improve manufacturing and production efficiencies, deliver new products to market and introduce existing products to new territories and market segments, while maintaining focus on the infant formula market.
The company described its positive cash balance of $6.7 million as strong, saying the reserves positioned the company for further business development.
Clover will reward its investors with a 0.5c fully paid ordinary dividend for the H1 FY18 half-year on 1 May, with an ex-dividend date of 9 April and record date of 10 April. Clover’s dividend was a 0.25c or 100 per cent increase on the dividend paid for the prior half-year.
The company’s securities gained 17c or 26.6 per cent to 81c by early afternoon trade on the ASX.