Dividend cut to zero as cash conversion fell to 26.3% and FCF turned negative

Operating cash flow fell 70.8% to NZ$12.1m and OCF/EBITDA dropped from 73.2% to 26.3% — the lower edge of Annolyse's historical baseline (3-period mean 59.8%). Pre-lease free cash flow swung from +NZ$12.1m to -NZ$17.6m. Net debt/EBITDA rose from 1.8x to 3.2x, and the dividend was cut from 13.0 cps to zero.

Revenue rose 12.5% to NZ$348.4m, but EBITDA fell 18.9% to NZ$46.1m, PBT fell 67.7% to NZ$7.6m and NPAT fell 56.4% to NZ$6.5m. Lower industry-wide kiwifruit yields and labour cost inflation — management cites a peak-season shortage of up to 1,100 people — compressed earnings against a bigger revenue base.

• OCF/EBITDA at 26.3% is well below the historical mean of 59.8% and sits with capex unchanged at NZ$29.7m (8.5% of revenue). Pre-lease FCF/NPAT of -270.0% means reported earnings did not translate into cash, which is why net debt rose roughly NZ$46.7m and the dividend was suspended. This matters because the headline 12.5% revenue growth disguises a balance sheet that absorbed cash rather than generated it.
• Leverage moved into a tighter zone. Net debt/EBITDA at 3.2x is right at Annolyse's historical mean (3.16x) but the trajectory — from 1.8x — is what matters with capex still elevated and EBITDA shrinking. Gross borrowings rose 33.6% to NZ$150.9m while cash fell to NZ$3.6m.
• Post-harvest margin compression carried the EBITDA decline. The dominant segment grew revenue 19.3% but its derived margin fell from 22.8% to 17.6%, and SeekaFresh and Australia both flipped to small segment losses. ROE fell from 6.0% to 2.4%.

Management states all operating segments were EBITDA positive and that operational improvement and capacity plans are in place for 2023, including the late-commissioned MAF Roda packing machine for 2023 crop volumes.

The HY22 shape is the key signal the release downplays. First-half EBITDA was NZ$49.4m and NPAT NZ$21.5m, so the implied second-half result was EBITDA of -NZ$3.3m and NPAT of -NZ$15.0m. The full-year profit and "EBITDA positive" framing therefore rest on a first half that the second half could not sustain, which raises the bar for what 2023 yield and labour recovery must deliver.

PBT growth of -67.7% is the cleaner operating read than NPAT growth of -56.4% because the effective tax rate moved from -36.7% to -14.3% — both periods carry tax credits that flatter NPAT relative to operating performance. Inventory days moved to the upper edge of the historical range at 12.5 (mean 10.5), consistent with working capital absorbing cash rather than releasing it.

Some drivers look transient: industry-wide yield shortfall and Covid-related labour cost spikes should ease. Others look structural at current scale: capex of NZ$29.7m on shrinking EBITDA, segment margin compression in post-harvest, and small segment losses in SeekaFresh and Australia. With pre-lease FCF at -NZ$17.6m versus a historical mean of +NZ$28.5m and leverage now at 3.2x, the read is that 2022 consumed balance sheet capacity that 2023 must rebuild before dividend resumption is realistic.

This briefing cannot assess the durability of 2023 yield and labour normalisation, which is the single variable that determines whether 2022 is a one-season setback or a reset of run-rate cash generation.