Select Harvests delivers on FY19 — share price rises (ASX: SHV)

Shares in nut retailer Select Harvests Ltd [ASX:SHV] are up 8.15% today. A positive response to the company’s full year result.

It seems drought hasn’t hit this grower too hard. Delivering a stellar harvest this season.

Total tonnage of kernels (product) was up 44% year-on-year. The best uptick in yield for the company in the past five years.

This increase in production did wonders for sales, too.

SHV’s revenue for the year was up 341.7%. Raking in just shy of $300 million in total. Leading to a hefty profit of $53 million.

A result that starkly contrasts to the $1.5 million loss they made last year.

It has been one hell of a turnaround for the company.

More growth to come for SHV, or flash in the pan?

At face value, you might expect a bit more movement in the share price for this kind of outcome.

An 8.15% rise seems rather paltry given the circumstances. Especially as SHV only have a market cap of roughly $742 million.

However, this muted response is more than likely due to the seasonal nature of the business.

Profit will ebb and flow with the demand and supply of the nuts. Innate volatility that relies not only on SHV’s crop but also on that of their competitors.

In this sense, today’s result did exceed expectations, only marginally. Whereas last year’s more dismal showing was the outlier.

Which begs the ultimate question, where to next?

Here is what CEO Paul Thompson had to say on the matter:

Looking ahead to the 2020 crop, our trees remain in good health with a favourable dormancy period and successful pollination program. We will continue delivering a full horticultural program to maximize yield. Productivity efficiency remains a focus over the next few months.

So, things seem to be on track for the long term. However, he did also broach concerns of water scarcity:

While water costs have reached near historic highs, our ownership strategy and prudent management of water purchases has meant Select Harvests will not be fully impacted by current pricing.

Take away from that what you will. Today at least though, Thompson has reason to smile.

If seasonal volatility isn’t your cup of tea, then there are alternatives. In fact, we’ve compiled four of our favorite stocks on the ASX right now. You can read all about them right now, for free, right here.


Ryan Clarkson-Ledward,
For Money Morning

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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