Select Harvests Faces Crop Volume Dip Amid Strong Price Gains and Debt Refinance
Select Harvests Limited reported a robust half-year FY2025 profit, driven by a 37.6% jump in almond prices and strategic debt refinancing. Despite a slightly reduced crop volume, the company’s outlook remains positive amid strong global demand.
- Net profit after tax rises to $28.7 million in 1H FY2025
- Almond prices increase 37.6% to $10.35/kg
- 2025 crop volume down 12.9% due to frost and bloom issues
- Completed $240 million debt refinancing with improved terms
- Operating cash flow improves significantly, no interim dividend declared
Strong Financial Performance Amid Challenging Crop Conditions
Select Harvests Limited has delivered a solid financial performance for the first half of FY2025, reporting a net profit after tax of $28.7 million. This represents a significant turnaround, driven primarily by a 37.6% increase in almond prices to $10.35 per kilogram, alongside disciplined cost management and operational efficiencies.
Despite the positive earnings, the company faced a 12.9% reduction in crop volume to 25,250 metric tonnes. This decline was attributed to a combination of factors including frost damage, a weaker bloom compared to the previous year, and larger hull sizes relative to kernel size in the key Nonpareil variety, which reduced the crack-out percentage. Nevertheless, crop quality metrics remain strong, supporting the company’s premium positioning.
Strategic Debt Refinancing and Cash Flow Improvements
In a notable development, Select Harvests successfully refinanced its debt facilities, securing $240 million across two tranches with extended maturities of three and five years. This refinancing reflects the company’s improved credit profile following a capital raise in 2024 and provides more favourable covenant terms, enhancing financial flexibility.
Operating cash flow improved markedly by $30.7 million year-on-year, supported by higher sales volumes and prices, as well as the collection of delayed receipts from FY2024 logistics issues. The company also recognised a one-off profit of $5.8 million from the sale of water rights, further bolstering cash flow. Despite these gains, no interim dividend was declared, with the full-year dividend to be determined later.
Market Dynamics and Outlook
Global almond demand continues to grow at a compound annual rate of 5-7%, underpinned by food trends favouring healthy and convenient foods. Select Harvests benefits from a relative cost advantage over Californian producers, whose almond acreage appears to have peaked. The company’s hedging strategy has locked in 86% of the 2025 crop at an AUD/USD rate of 64.8 cents, mitigating currency risks amid a tightening global supply environment.
Demand remains particularly strong in key markets such as China, India, and Southeast Asia, with Indian demand bolstered by the Diwali season and tariffs favouring Australian supply. Prices for lower-grade almonds have also reached five-year highs due to limited buyer positions and robust European demand. These factors support Select Harvests’ positive pricing outlook and reinforce its strategic focus on operational efficiency and processing scale expansion.
Operational and Strategic Initiatives
The company continues to advance its transformation agenda, emphasizing safety, logistics, procurement discipline, and technology integration. Investments in new harvest equipment and farm drainage improvements are underway to sustain productivity. While the 2025 crop volume is slightly down, the company expects processing volumes to rebound in 2026, supported by contracted third-party processing agreements.
Management remains focused on maintaining a strong balance sheet and delivering shareholder value through disciplined cost control and strategic growth initiatives. The macroeconomic environment remains favourable, with Select Harvests well positioned to capitalise on rising global almond demand and pricing strength.
Bottom Line?
Select Harvests’ strong half-year results and refinancing set the stage for continued growth, but crop volume challenges and dividend uncertainty warrant close investor attention.
Questions in the middle?
- How will Select Harvests manage the impact of reduced crop volumes on full-year earnings?
- What is the company’s updated dividend policy following the decision not to declare an interim dividend?
- How will ongoing global supply constraints and currency fluctuations affect pricing and margins?
