Shares in Murray River Organics have tumbled by more than 40 per cent after the organic dried fruit producer cut its full-year profit forecast, citing “teething issues” with its expansion and harvest delays.
The company, which listed on the ASX in December, said 2016/17 pro forma revenue will be down by $10 million, in a trading up date on Friday.
Earnings are now expected to be between $12.5 million to $13.5 million, compared to $15.9 million in its prospectus forecast, and pro-forma full-year net profit is expected to be $4.2 million to $4.9 million.
The downgrade rattled investors with shares in Murray River Organics plunging 44.5 cents, or 43.2 per cent, to 58.5 cents.
Managing director Erling Sorensen said “teething issues” with the group’s rapid expansion had blown out costs while wet weather had slowed sales.
He said half of the company’s revenue miss was due to harvest delays from an unusually cool and wet spring, coupled with heavy rain in the Sunraysia growing region, which covers parts of southwestern NSW and northwestern Victoria.
“In the Sunraysia region they encountered a very wet April,” he said.
“We had about 52 mm of rain in the latter part of the month and this compares with a long historical average of only 18.5 mm for the month of April.”
He said Murray River Organics was only 20 per cent into its harvest when the rain hit and about 14 to 20 days of clear weather was needed to complete it.
A slower-than-anticipated uptake in sales following delays to the refurbishment of the company’s processing factory – which held up the processing of dried vine fruit, was the second major factor that weighed on the group’s revenue.
However, about $8 million of that missed revenue is expected to be added to what is expected in the 2018 financial year.