Shares in Select Harvests surged as much as 6.9 per cent after Australia’s second-biggest almond grower said an improved crop yield and better prices will bolster its net profit, before one off items, 71 per cent to $22 million.
At 1211 AEST Select Harvests shares rose 15 cents, or 4.2 per cent, to $3,75, after earlier rising to $3.85. The company told the ASX it expects its almond crop in the 12 months to June 30, 2013 to be more than double the previous year at 11,800 tonnes due to better weather.
The average price paid per kilogram of Select Harvests almonds is $6.38kg in 2013 compared with $5.03kg in 2012, a 27 per cent increase, the company said.
Paul Thompson, the company’s managing director, told Markets Spectator that after “three horrendous years of weather” the 12 months to June 30 was a period of benign growing conditions. Moreover, Select Harvests has improved its farming practices while a short fall of water in California, where 80 per cent of the world’s almonds are grown, has cut production there as global demand for almonds continues to increase.
Almond consumption is growing in popularity among the wealthier economies of the US, Europe and Australia while consumption in countries such as China, India, the Philippines and Thailand is rising as the nuts are seen as a healthier alternative to biscuits and chocolate bars.
Thompson says global almond consumption is increasing 8 per cent a year.
The drop in the Australian dollar against the US currency, down 13 per cent between April 11 and June 30, also boosted Selected Harvests earnings, he says.
Commercial almond production is limited to the Australia, the US and Spain as the conditions for growing the crop is somewhat onerous. Almond trees need to be in desert like conditions but have a source of plentiful water while temperatures need to be below 7 Celsius for 200 hours while the trees like dormant.
Selected Harvests has more than 4450ha of almonds in Robinvale, northern Victoria, the Riverina district of New South Wales and the Dandaragan Plateau in Western Australia, according to its website. The company has been in operation since the mid 1970s and is Australia’s second-biggest producer behind Olam, says Thompson.
The stock has risen more than threefold in the last 12 months compared with the 21 per cent gain in the S&P/ASX200 Index during the same period.