New Zealand-based honey producer Comvita has announced a significant restructuring plan, cutting 67 jobs and closing its UK and European Union subsidiaries as it grapples with financial difficulties. The company, known for its premium Mānuka honey products, reported a net loss of NZ$6.5 million for the six months ending December 2024. Despite ongoing challenges, Comvita remains optimistic about a potential rebound by 2026.
Job Cuts and Corporate Restructuring
As part of a company-wide overhaul, Comvita has eliminated 67 positions, including four senior leadership roles, and reduced its board of directors from eight to six members. The restructuring also includes the closure of its subsidiaries in the UK and EU, shifting instead to a distributor-based model to reduce costs and streamline international operations.
CEO Brett Hewlett emphasised that these measures are necessary for long-term sustainability. “A complete restructure has simplified the business in EMEA, North America and China,” the company reported. Comvita is also in the process of hiring a new CEO after Hewlett took over from David Banfield in August 2024.
Declining Sales and Market Challenges
Comvita’s revenue fell 5.3% to NZ$99.7 million in the first half of FY25. A 12.2% decline in sales from China, its largest market, was a major factor in the downturn, with revenue in the region dropping to NZ$41.2 million due to weak consumer sentiment and aggressive price competition. The downturn in China also affected sales in Australia and New Zealand, which fell by 19.4%.
Despite the losses, the company saw growth in other markets, with North American sales rising by 12% to NZ$14.6 million and the rest of Asia increasing by 14.9% to NZ$22.1 million. However, these gains were not enough to offset the broader financial difficulties. Comvita’s gross margin also dropped significantly, declining by 930 basis points to 50.7%.
Accounting Irregularities Further Complicate Financial Woes
Adding to the company’s challenges, Comvita recently disclosed accounting irregularities that resulted in an overstatement of after-tax earnings by NZ$4 million over the 2023 and 2024 financial years. An internal investigation, alongside an independent accounting review, found that sales figures in China and Singapore had been overstated, while sales expenses had been under-accrued. A historical inventory valuation error was also identified.
Chair Bridget Coates described the situation as “deeply regrettable” and assured stakeholders that stricter audit and risk controls had since been implemented.
Recovery Strategy and Long-Term Outlook
In response to its financial difficulties, Comvita has initiated a cost-cutting program aimed at saving an additional NZ$10 million in FY25. The company is also maintaining its focus on its premium product strategy, which has helped preserve its market share in key regions such as China, Singapore, Hong Kong, and South Korea.
Looking ahead, Comvita expects sales to remain flat throughout FY25, with continued weakness in China. However, improvements are anticipated in North America and other parts of Asia. Hewlett remains optimistic about a potential turnaround by 2026, emphasising that the company’s brand strength and global positioning will play a crucial role in its recovery.
“The economic outlook for China does remain soft, but we still remain very positive on the long term prospects,” Hewlett said.