Rain puts extra drain on Asian Citrus' bottom line

Persistent heavy rain from April to August last year led to higher production costs for orange plantation operator Asian Citrus.

Typhoon Vicente triggered rainstorms and gales in the Guangxi Zhuang autonomous region, where the company's plantations are located.

"We are considering diversifying into processing other agriculture produce, such as corn and red bean, to maximise the utilisation of our plants at times when fruit supply is limited or affected by weather," Eric Sung, the firm's finance director, said.

Total production volume fell by about 6 per cent at the group's two operating plantations, with the Hepu plantation's output dropping 26.9 per cent to yield 23,838 tonnes, compared with 44,906 tonnes the previous year.

"Fertilisers and pesticides were washed away and had to be applied in greater quantities to ensure healthy growth of the orange trees," Asian Citrus executive director Tommy Tong said.

Fertilisers made up about 56 per cent of costs . The firm said the rise in mainland wages drove up labour costs 28.9 per cent to 41.9 million yuan (HK$52.2 million).

Asian Citrus' core net profit for the six months to December 31 was 249.5 million yuan, a 22.7 per cent drop from a year earlier.

The firm continued its share repurchase programme to improve shareholder value.

During last year's second half, it repurchased and cancelled 10,649,000 ordinary shares at HK$0.01.

Asian Citrus has plans for a third juice processing plant in Guangxi and a third plantation in Hunan province, which will begin operating this year and next year, respectively.

The group is the mainland's largest orange producer and plantation owner.