Select Harvests Faces Tough Year, While WiseTech Global Reports Strong Growth in FY2023

Select Harvests Limited Faces Financial Challenges Amidst Tough Almond Market

Select Harvests Limited (ASX: SHV) has reported a challenging financial year ending September 2023, with a Net Profit After Tax (NPAT) of (AU$114.7) million, a significant downturn from the previous year's NPAT of AU$4.8 million. Several factors contributed to this decline:

• Crop Volume and Pricing Impact: The company experienced a lower crop volume and market pricing for the 2023 crop, leading to a fair value loss of AU$74.5 million.
• Inventory Write-Down: A write-down of AU$24.5 million was attributed to the 2022 crop inventory.
• Goodwill Write-Off: A non-cash write-off of AU$26.0 million was incurred due to the write-off of goodwill.

The La Nina weather pattern, affecting the almond orchards, resulted in a 30.2% decrease in the 2023 crop compared to 2022. Additionally, global almond pricing remained below historical levels, impacting the achieved price of AU$6.42/kg.

Operational Challenges and Future Strategies:

• Crop costs for 2023 were 23% higher than the previous year, driven by increased fertiliser and chemical prices.
• The quality profile of the 2023 crop was lower than historical averages, requiring mechanical drying.
• The company plans to enhance processing capacity in FY2024, targeting 40,000 MT, and improve the productivity of its processing plant.

Financial Position:

• The net bank debt/equity ratio as of September 2023 was 46.2%, and while higher than desired, the balance sheet remains sound.
• The company has undertaken measures to improve working capital management, contributing to a AU$67.4 million reduction in net working capital compared to the previous year.

Outlook:

• The USDA's 2023 California Almond Objective Measurement Report suggests a potential rebound in almond prices due to lower-than-expected crop volumes in the US.
• Select Harvests aims to capitalize on this trend, targeting premium markets and focusing on cost-effective production.

WiseTech Global Reports Strong Financial Performance in FY2023

WiseTech Global Limited (ASX: WTC) has delivered robust financial results for the fiscal year ending June 2023, showcasing its continued growth and strategic initiatives:

Financial Highlights:

• Total Revenue for FY2023 reached AU$816.8 million, marking a substantial 29% increase from the previous year.
• CargoWise recurring revenue surged by 48%, reaching AU$650.1 million, driven by both existing and new customer growth.
• Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) stood at AU$412.1 million, reflecting a 28% growth from FY2022.

Operational Achievements:

• The company strategically entered the North American landside logistics market with acquisitions of Envase Technologies and Blume Global.
• Successful global customs rollouts with major players like Kuehne+Nagel and FedEx demonstrate WiseTech's expanding footprint.

• WiseTech maintains a strong balance sheet with significant liquidity of approximately AU$400 million from cash and undrawn debt facilities.
• Operating cash flow for FY2023 was AU$433.3 million, and free cash flow increased by 23% to AU$291.4 million.

Outlook and Vision:

• WiseTech's focus on Landside Logistics through strategic acquisitions is expected to create significant growth opportunities.
• The company has expanded its product development team, reinforcing its vision to be the operating system for global logistics.

In conclusion

In summary, Select Harvests faces short-term financial challenges attributed to market conditions and operational factors. However, the company remains resilient, implementing strategies to navigate these challenges and capitalize on future market improvements. On the other hand, WiseTech Global's FY2023 performance reflects its resilience and successful execution of strategic initiatives. The company's sustained growth, diversified revenue streams, and financial strength position it well for future expansion and innovation in the global logistics industry.

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