Chinese citrus producer Dongfang Modern Agriculture has pointed to the lower productivity of recently acquired orchards and financing costs associated with its acquisition strategy for a fall in net profit over 2018 (year ending 31 December).
The company posted a profit of Rmb430m (US$64.3m) after tax, down 8 per cent from Rmb467m (US$69.8m) in 2017, while revenue came in at Rmb1.173bn (US$175m), up 10.4 per cent from Rmb1.063bn (US$159m) the year prior.
Commenting on the result, Dongfang’s executive chairman, Hongwei Cai, said that the company achieved a seventh consecutive record harvest, reflecting the acquisition of a 526ha camellia plantation and a 354ha navel orange plantation in 2018.
The company sold 283,734 tonnes of fruit and camellia products, up 7 per cent from 265,496 tonnes the previous year.
“This was a solid result. Excluding the impact of recent orchard acquisitions, our crop was in line with last year’s for all harvests,” Cai explained. “We have not yet achieved the full benefit of our new navel orange and camellia orchards and anticipate our cultivation techniques will increase their yield in future harvests, strengthening margins.
“Our primary strategy remains to aggregate orchards within China’s agricultural sector, and today we operate plantations on 11,641ha of land in the Ganzhou Special Citrus Zone which is acknowledged for producing high-quality citrus products.”
During the year the group obtained a A$50m (US$35m) debt facility which was used in part to fund the acquisition of a 70 per cent interest in Bio Health, an Australian company with a Therapeutic Goods Administration (TGA) licence, enabling Dongfang to enter the health supplements market.
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