ML Macadamia ML Macadamia Orchards LP, plagued by one of the smallest fourth-quarter harvests in the 16-year history of the partnership, lost $136,000 in the final three months to end 2002 with only its second full-year loss in the past 12 years.
posts full-year loss
The partnership blames
a poor harvest and lower
macadamia nut pricesBy Dave Segal
dsegal@starbulletin.com
However, the company's overall $480,000 deficit also marked its second loss since 2000. ML Macadamia lost $398,000 that year after becoming embroiled in a legal dispute with the company contractually obligated to purchase its nuts.
"It was a difficult year (in 2002)," said Dennis Simonis, president and chief operating officer of ML Macadamia. "The crop looked very promising initially and tailed off very quickly in the fourth quarter."
ML Macadamia, which owns or leases more than 4,100 acres of orchards on the Big Island, said its crop production in Keeau was down 17 percent in 2002 from the previous year as heavy rainfall reduced pollination and nut sets. Overall, macadamia nut production last year was down 7 percent to 21.4 million pounds from 23.0 million pounds harvested in 2001.
ML Macadamia's fourth-quarter loss, which amounted to a loss of 1 cent a Class A unit, was a turnaround from a year ago when the company had a gain of $236,000, or 3 cents a unit. Revenues in the quarter fell 10.8 percent to $6.2 million from $6.9 million a year earlier.
For the year, ML Macadamia's loss of 6 cents a Class A unit compared with a gain of $1 million, or 13 cents a unit, in 2001. Excluding a one-time gain of $1 million from a favorable legal settlement with Mauna Loa Macadamia Nut Corp., ML Macadamia's 2001 earnings would have been flat. ML Macadamia won a court decision in June 2001 requiring Mauna Loa to purchase all of ML Macadamia's nuts, regardless of condition, as required in three of five purchase contracts. Mauna Loa paid off more than $1 million that was owed in September and October of 2001.
Full-year revenues in 2002 fell 13.8 percent to $14.6 million from $16.9 million a year earlier.
Lower nut prices and reduced contract farming revenue, which fell 12.9 percent in the quarter and 13.3 percent in the year, also dragged down earnings.
"We expected a better price from Mauna Loa and the price came in a little bit lower, down about a penny," Simonis said.
ML Macadamia sells its nuts exclusively to Mauna Loa under long-term purchase contracts. Mauna Loa then processes and markets the nuts under the Mauna Loa brand name. ML Macadamia has a complex pricing arrangement based half on the current year processing and marketing results of Mauna Loa and half on the two-year trailing average of U.S. Department of Agriculture macadamia nut prices.
In 2002, ML Macadamia received an average price per pound of 47.5 cents compared with an average price of 48.3 cents per pound in 2001. The USDA portion of the nut price last year decreased 5 percent and Simonis estimates Mauna Loa's portion fell about a penny. Mauna Loa hasn't provided ML Macadamia with its final 2002 audited nut price.
"Mauna Loa comprises a big portion of the USDA price," Simonis said.
Simonis, though, is optimistic for this year since Mauna Loa, which paid off its legal judgment but was behind on other remuneration, has caught up on its payments to ML Macadamia.
"It's very gratifying they're caught up," Simonis said. "It's a sign of improved financial performance. That's one of the indicators that makes us believe the nut price will get better."
In another action, ML Macadamia ran its streak of consecutive dividends to 68 with the declaration of a 5-cents-a-unit dividend for the second quarter.
The payout will be made May 15 to unit holders of record as of March 31.
