H2 NPAT turned negative despite 20% revenue growth as China lockdowns hit

What changed

• Revenue rose 20.3% to $619.2m, but EBITDA fell 4.3% to $68.5m and PBT fell 6.0% to $45.6m. Attributable NPAT fell 27.9% to $19.4m.
• The NPAT/PBT divergence is not a tax story (effective tax rate fell to 16.2% from 23.9%). Profit from continuing operations was $38.2m versus $19.4m attributable, so roughly $18.8m went to non-controlling interests.
• H2 was materially weaker than H1. HY22 delivered about 82% of full-year EBITDA and roughly 134% of full-year attributable NPAT, implying H2 attributable NPAT of about negative $6.6m. Management cites China lockdowns depressing market prices during critical sales.
• Operating cash flow rose 12.6% to $44.9m and capex eased to $14.6m, giving pre-lease FCF of about $30.3m versus $24.0m prior.
• Balance sheet strengthened: cash jumped to $65.8m from $35.4m, gross borrowings rose modestly to $41.1m, and the group shifted from $2.9m net debt to $24.7m net cash.
• The final-instalment dividend was cut to 3.5c from 9.5c, a 63% reduction on the directly comparable component.
• Segment mix moved sharply: Logistics revenue jumped to $123.3m from $51.7m, while Horticulture fell 6% to $228.9m and Global Proteins was the largest contributor at $319.9m. The current segment labelling differs from prior year, which limits clean like-for-like read.

What matters

• Shape of earnings through the year. The headline 27.9% NPAT decline understates how weak H2 was. The second half effectively produced no attributable profit, and underlying EBITDA of $77.9m (up 6%) versus statutory EBITDA down 4.3% means most of the "growth" sits in a non-reconciled adjusted measure.
• Dividend cut signals caution despite net cash. Cutting the comparable dividend instalment from 9.5c to 3.5c while carrying $24.7m of net cash and improving operating cash flow is a defensive capital-allocation choice. It is a clearer forward signal than the GAAP result.
• Working capital inflation. Trade debtors rose 51.1% to $36.2m and inventories rose 43.9% to $42.6m — moves that outpace the 20% revenue growth. Receivable days moved to 21 from 17 and inventory days to 25 from 21. OCF still rose, but the quality of that OCF needs scrutiny given the scale of WC build.

Expectations

No quantified FY23 target or forward-work balance was disclosed in the supplied materials. Management describes the result as "at the top end of market guidance," but the underlying guidance figure itself is not in the extracts, so the outperformance cannot be sized. The seasonality context is unambiguous: HY22 carried the year, and anyone using HY22 run-rate to infer FY earnings would have been significantly overcounted. Absent forward disclosure, the release does not support a view on whether the H2 weakness is cyclical (China pricing) or structural.

Quality of result

Mixed. Statutory earnings deteriorated on every line below revenue, and roughly half of attributable NPAT appears to have been absorbed by non-controlling interests this year — a structural feature rather than a one-off. Cash conversion optically improved (OCF/EBITDA 65.5% versus 55.6%), but that sits alongside a $25.2m combined build in receivables and inventory, so the cash improvement is not obviously an operational quality uplift. The company leans on an "Underlying EBITDA" of $77.9m which is $9.4m above statutory, without a reconciliation in the supplied materials. Capex at 2.4% of revenue ran below last year's 3.1%, which flatters pre-lease FCF. On balance, durable positives are the net-cash swing and lower capex intensity; timing- and presentation-assisted elements include the underlying EBITDA bridge and the segment relabelling.

Unresolved

• The reconciliation between Underlying EBITDA of $77.9m and statutory EBITDA of $68.5m is not supplied, so the nature of the $9.4m adjustment is opaque.
• Current-period segment results (profit, not just revenue) are not disclosed, so the margin impact of the shift toward Logistics versus Horticulture cannot be assessed.
• The full-period dividend (first plus second instalment) cannot be reconstructed from the supplied data; the 3.5c figure is only the second instalment.
• The driver of the very large non-controlling interest allocation (profit from continuing operations $38.2m versus $19.4m attributable) is not explained in the extracts.
• Whether H2 weakness in Horticulture/apple pricing persists into FY23 is not addressed by any forward commentary in the supplied materials.

This briefing cannot assess valuation, FY23 trading conditions, or the specific composition of the Underlying EBITDA adjustment, because none of those are disclosed in the supplied data.

Key metrics

Segment breakdown

Analytical metrics

This analysis was generated using Annolyse, an AI-powered tool that analyses NZX company announcements. The analysis is based on available company filings and standard Annolyse calculations. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.