Shareholder Strike Highlights Risks Despite Select Harvests’ Financial Recovery
Select Harvests Limited reported a strong financial turnaround in FY2024 with a $46 million EBITDA and a modest net profit, while facing shareholder concerns over a recent capital raise and remuneration report at its AGM.
- FY2024 EBITDA of $46 million and net profit of $1.5 million after tax
- Significant operational improvements in crop volume, processing capacity, and sustainability
- Completed $80 million fully underwritten capital raise to retire debt and fund capacity expansion
- First strike recorded on remuneration report amid shareholder dissatisfaction
- No planned M&A activity; focus on maximizing shareholder returns and leveraging assets
Financial Turnaround in a Challenging Market
Select Harvests Limited has marked a notable recovery in its financial performance for the 2024 fiscal year, reporting an EBITDA of $46 million and a net profit after tax of $1.5 million. This represents a dramatic $116 million improvement compared to the previous year, signaling a successful turnaround despite a persistently challenging trading environment characterized by relatively low almond prices.
The company’s chairman, Travis Dillon, highlighted that the improved results were underpinned by a return to more normal crop volumes and enhanced operational efficiencies. The 2024 almond harvest reached 29,527 tonnes, with excellent quality despite adverse weather conditions in New South Wales, where rainfall was double that of the prior year.
Operational and Sustainability Advances
Operationally, Select Harvests expanded the productive capacity of its Carina West processing facility by 10,000 tonnes, processing over 40,000 tonnes in total. This capacity boost was achieved with modest capital investment and contributed to an 8.1% reduction in processing costs. The company also made strides in sustainability, achieving a 21% reduction in greenhouse gas emissions and producing nearly all its own compost requirements, alongside ongoing investments in irrigation technology.
Safety remains a priority, with a slight increase in the total recordable injury frequency rate attributed partly to improved reporting processes. The board underlined its commitment to continuous safety improvements under Managing Director David Surveyor’s leadership.
Capital Raise and Shareholder Sentiment
Despite operational progress, Select Harvests faced shareholder pushback at the AGM. The company completed a fully underwritten $80 million capital raise in the second half of FY2024 to retire debt and fund further capacity expansion at Carina West. This move, coupled with a $56 million cash receipt delay due to logistics issues during a provider transition, contributed to shareholder dissatisfaction reflected in a significant rise in votes against two resolutions, including the remuneration report.
The board acknowledged the frustration of long-term shareholders but defended the capital raise as a necessary step to repair the balance sheet after years of negative cash flow totaling $161 million between 2018 and 2023. The company emphasized that the reset balance sheet would provide resilience against future market shocks and agricultural risks.
Remuneration Report and Governance
For the first time, Select Harvests recorded a strike on its remuneration report. An external review confirmed the remuneration framework as contemporary and appropriate, with increased transparency on targets and outcomes. Proxy advisors unanimously recommended voting in favor of all resolutions, suggesting that the strike was primarily driven by shareholder concerns related to the capital raise and logistics challenges rather than remuneration policy itself.
The board has committed to considering shareholder feedback on remuneration and making adjustments where appropriate in the coming year.
Looking Ahead
Looking forward, Select Harvests has no plans for mergers or acquisitions, focusing instead on maximizing returns from its existing asset base. The company’s leadership is poised to build on the operational gains and sustainability initiatives achieved in 2024, aiming to deliver stronger shareholder value while navigating the complexities of the almond market.
Bottom Line?
Select Harvests’ FY2024 rebound sets a foundation, but shareholder confidence will hinge on execution and communication in 2025.
Questions in the middle?
- How will Select Harvests address shareholder concerns to restore confidence post-capital raise?
- What specific operational targets will management prioritize to sustain profitability gains?
- Could further weather-related risks or market volatility impact the company’s growth trajectory?