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Mac nut producer sees net loss rise

Andrew Gomes

Big Island-based ML Macadamia Orchards LP suffered a wider net loss in the third quarter over the same quarter last year due to lower nut production and effects from its purchase of another nut producer.

The state’s largest macadamia nut producer lost $308,000, or 4 cents a share, in the July-September period compared with a loss of $42,000, or 1 cent a share, in the same three months last year.

Much of the degraded financial results stemmed from a 14 percent decline in ML Macadamia’s third-quarter harvest, which totaled 5.4 million pounds of nuts. The company said drought conditions in its Kau orchards caused the drop.

Lower production translated to $4.1 million in nut sales in the quarter, down from $4.4 million a year earlier.

Revenue from work ML Macadamia performs for other orchard owners also declined in the quarter, falling 51 percent to $615,000 from $1.27 million.

The contract work was reduced largely because ML Macadamia acquired a company from which it previously derived farm service revenue.

ML Macadamia bought International Air Service Co. Ltd. on Aug. 1, meaning that it ceased billing the company for farm work at the end of July. ML Macadamia aims to earn more from selling nuts from IASCO’s orchards covering about 1,100 acres over the long term, according to Dennis Simonis, company president and chief executive officer.

The IASCO acquisition also resulted in accounting moves, including writing off $306,000 in good will ML Macadamia carried on its books representing the extra value of its farm service contracts with IASCO, as well as a $125,000 acquisition cost for the deal that was almost offset by a $120,000 gain from purchasing IASCO for less than market value.

Shares of ML Macadamia closed yesterday unchanged at $2.75 before the earnings announcement.


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