Select Harvests Delivers Major Turnaround with $28.7M Profit Surge

About Select Harvests Ltd

Select Harvests Ltd (ASX: SHV) is one of the world’s largest fully integrated almond producers and the second largest in Australia. The company’s core capabilities span horticulture, orchard management, and almond processing, sales & marketing. Their portfolio of almond orchards includes more than 9,371 hectares of company owned and leased land. Their Carina West processing facility has the capacity to process above 40,000Mt of almonds in peak season.

Their core brands include Renshaw, which was established 30 years ago and supplies bulk product to major bakeries, manufacturers and wholesalers; and Allinga Farms who supply bulk product all over the world, to both established and emerging markets.

Select Harvest has worked in partnership with the Almond Board of Australia to raise awareness of Australian almonds, which significantly increased consumption growth, which is the core focus of the company’s marketing program. They also participate in annual industry-wide programs which are focused on events and themes to showcase Australian almonds to consumers.

Strong Financial Performance and Profit Recovery

Select Harvest reported a 54% increase in revenue from continuing ordinary activities and an astonishing turnaround in profit figures. Key performance indicators have vastly improved from the previous period, signalling renewed operational vigour and a robust strategic direction in a favourable macro-economic environment.

The financial report shows revenue climbing to approximately $104.5 million, a marked improvement from the comparative period. More notably, profit from continuing ordinary activities attributable to members surged by more than 1,280% to reach $28.7 million – a dramatic reversal from a net loss recorded in the previous corresponding period.

This substantial shift, supported by a mix of one-off items such as a recognised gain from the sale of water rights and ongoing operational improvements, reflects the Company’s ability to quickly capitalise on a recovering global almond market.

Net tangible assets per security also experienced an upward shift, increasing from $2.89 to $3.14. This improvement in the balance sheet comes at a time when global almond prices are on an upward trajectory, and the Company is projecting solid crop yields.

The recovery has been further underpinned by the prudence in recognising fair value gains on biological assets, as the Company continues to refocus its efforts on maximising returns from its expansive orchard and processing operations.

Operational Strategy and Market Dynamics

Select Harvests is well positioned to benefit from supportive market conditions with a strategic focus on safety, operational efficiency and capacity expansion. The business report details progress against strategic pillars that include substantially increasing almond volumes, driving processing scale and efficiency, and maximising the crop returns. Management has also outlined plans to optimise fertiliser use, adjust bee density and improve water management in a bid to boost yield over the longer term.

The Company’s processing facility is currently operating at full production, with approximately 35% of the crop already processed, and ongoing investments in technology and cost-efficient initiatives promise further improvement.

These operational advances have been complemented by a deliberate expansion of the customer base across key export markets such as China, India, the Middle East and South East Asia. In doing so, Select Harvests is not only reinforcing its domestic leadership but is also strengthening its global competitive edge amid rising almond prices.

Strengthened Liquidity and Capital Restructuring

In addition to the stellar profit recovery, Select Harvests has made significant headway on its capital and liquidity fronts. A successful capital raise of $80 million was completed in September 2024 has contributed to an improved debt profile, while the recent renewal of a $240 million debt facility – arranged with major banking institutions including NAB, Rabobank and CBA – further cements the Company’s financial stability.

The capital raise involved a fully underwritten institutional placement and a institutional component of the fully underwritten 1 for 9.2 accelerated non-renounceable entitlement offer, which raised $61.7 million together, and a retail component of the Equity Raising which raised $18.3 million. The new facility, together with the maintenance of an undrawn bank overdraft facility limit, reflects the robust liquidity available to support ongoing operational and strategic investments.

The improved net asset position, combined with a disciplined approach to managing the balance sheet, provides the Company with a solid foundation as it navigates a competitive and ever-changing global market.

The strong cash flows expected in the latter half of the financial year further substantiate the Company’s forward-looking strategy and ability to meet both operational requirements and future debt servicing obligations.

Optimistic Outlook and Future Growth Prospects

Directors of Select Harvests remain confident in the Company’s ability to capitalise on emerging market opportunities and deliver long-term value for shareholders. With the catalyst of improved global almond market conditions and the momentum from recent operational upgrades, the focus now shifts to further crop processing and a planned expansion in processing capacity.

The forecast for the 2025 almond crop – estimated at between 24,000 and 26,500 metric tonnes, with an average selling price of around $10.35 per kilogram – reinforces the optimistic business outlook. As the Company continues to refine its strategy and invest in both on-farm and processing efficiencies, industry watchers will be keenly observing how these initiatives translate into sustainable growth.

The robust performance in the current half-year, along with strategic capital improvements and a well-positioned balance sheet, offers promising signals for shareholders and the wider market alike.

Select Harvests’ interim performance exemplifies the potential for significant turnaround even in volatile commodity markets. Investors will undoubtedly be watching closely as the Company builds on these early gains with a focus on operational excellence and strategic market expansion in the challenging yet opportunistic landscape of the global almond industry.