China’s largest citrus grower Dongfang Modern Agriculture Holding Group (ASX: DFM) has announced record revenues for 2018 but a year-on-year drop in net profit.
Revenues rose 10.4% to RMB 1.173 billion (US$175 million), which it said reflected continued strong demand for camellia, navel oranges, tangerines and pomelos.
Net profit after tax was down 8% at RMB 430 million (AUS$64 million) due to lower productivity of recently acquired orchards and financing costs associated with the acquisitions, including the purchase of Bio Health Pharmaceuticals.
Executive chairman Hongwei Cai said the company achieved a seventh-consecutive record harvest, reflecting the acquisition of a 526-hectare camilla plantation and a 354-hectare navel orange plantation in 2018. It sold 283,734 metric tons (MT) of fruit and camellia products, up 7% year-on-year, and said that delivery prices were in line with 2017.
“This was a solid result. Excluding the impact of recent orchards acquisitions, our crop was in line with last year’s for all harvests. We have not yet achieved the full benefit of our new navel orange and camellia orchards and anticipate our cultivation techniques will increase their yield in future harvests, strengthening margins,” he said.
“Our primary strategy remains to aggregate orchards within China’s agricultural sector, and today we operate plantations on 11,641 hectares of land in the Ganzhou Special Citrus Zone which is acknowledged for producing high-quality citrus products.”
The company says it continues to assess further growth opportunities through acquiring plantations in China and also expects a further increase in revenue in 2019.