Select Harvests Faces Water Risks Despite Strong Profit and Debt Reduction

Robust Financial Turnaround

Select Harvests Limited has delivered a marked improvement in its financial health for the fiscal year 2025, reporting a net profit after tax (NPAT) of $31.8 million. This represents a substantial turnaround, supported by disciplined capital management and operational efficiencies. Notably, the company halved its net debt to $79.1 million, bringing gearing down to a conservative 15.1%, well below the board’s target of 25%. This deleveraging strengthens the company’s balance sheet and positions it well for future growth.

Crop Performance and Market Dynamics

The almond crop yield for 2025 came in within the projected range but was lower than initially anticipated, consistent with broader industry trends reported by the Almond Board of Australia. Despite this, Select Harvests achieved a premium almond price of $10.18 per kilogram, outperforming market benchmarks through disciplined price optimisation and customer-focused strategies. Demand remains strong in key export markets such as China, India, and Turkey, underpinned by favourable macroeconomic factors and limited supply growth, particularly from California where almond acreage has plateaued.

Strategic Progress and Capital Investment

Management’s focus during 2025 centred on increasing almond volumes, enhancing processing scale and efficiency, and maximising returns from the crop. The company advanced its Project Optimus Phase 2 at the Carina West Processing Facility, expanding capacity from 40,000 to 50,000 tonnes with modest capital outlay. Additionally, investment in a new kernel recovery line is expected to improve yield by approximately 3%, reduce waste, and strengthen profitability. These initiatives align with Select Harvests’ commitment to sustainability and operational excellence.

Sustainability and Governance

On the sustainability front, Select Harvests continues to implement practical initiatives to reduce waste and improve resource efficiency, preparing for mandatory sustainability reporting in 2027. Water availability remains a critical operational concern, with rising prices and government buybacks in the Murray-Darling Basin impacting irrigation resources. The company advocates for sensible water allocation to support the almond industry’s long-term viability. Governance improvements were also highlighted, including updated board and committee charters and a refreshed corporate governance statement.

Shareholder Engagement and Outlook

The 2025 Annual General Meeting addressed shareholder feedback, particularly regarding the previous year’s capital raise which led to a first strike against the remuneration report. The board acknowledged this feedback while reaffirming the necessity of the capital raise to support the company’s turnaround. Looking ahead, Select Harvests plans to resume dividend payments in 2026, targeting a fully franked payout of 25-50% of NPAT, balancing shareholder returns with prudent capital management. The company remains optimistic about the almond market outlook, supported by strong global demand and stable pricing.