Mac nut grower decreases loss and increases revenue

Royal Hawaiian Orchards LP, Hawaii’s largest grower of macadamia nuts, narrowed a first-quarter net loss to $253,000 from $628,000 a year earlier as it continued making headway selling more packaged snack products with nuts it used to sell wholesale.

The Hilo-based company nearly doubled revenue to $3.6 million in the recent quarter from $2 million a year earlier, driven by packaged snack sales of $1.7 million in the recent quarter that was up from $200,000 a year earlier.

The company formerly known as ML Macadamia Orchards LP introduced a line of sweet and savory nut snack foods in late 2012 as a strategy to avoid raw-nut price fluctuations and capitalize on higher profit margins through retail sales.

Raw nut sales for Royal Hawaiian Orchards in the first quarter totaled $1.7 million, up from $1.4 million a year earlier.

Royal Hawaiian Orchards said it intends to continue aggressive moves to increase distribution of its snack products through mainstream grocery and mass-merchandise retailers by spending more on promotions and fees to secure shelf space.

In the first quarter, the company spent $229,000 on such fees and trade discounts while also increasing its gross profit from snack products by $452,000.

"Substantial advertising and promotional expenditures are required to introduce new products or maintain or improve a brand’s market position," the company said in its financial report, released Wednesday.

"Accordingly, our future success depends, in large part, on our ability to effectively maximize the return on these expenditures to implement our growth strategy of expanding distribution and improving placement of our products and attracting new customers to our brand."

To help finance the growth strategy over the next two years, Royal Hawaiian Orchards sold 3.6 million shares in the partnership to existing shareholders for $2.55 apiece in February and raised $8.9 million after expenses.

Shares in the company traded on an over-the-counter exchange closed 15 cents higher at $3.15 Wednesday after the earnings announcement. Shares over the last 52 weeks have traded between a low of $2.25 on Dec. 19 and $3.53 on July 2.