Nut sales gain
from AtkinsA Big Island grower
has seen increased demand
for macadamia nuts
Count ML Macadamia Orchards LP as a big supporter of Americans' changing eating habits.
The Big Island company, seeing demand grow nationwide for nuts and other protein, posted net income of $406,000 in the fourth quarter to push its full-year earnings into positive territory and avoid what would have been its third annual loss in 13 years.
"The Atkins and Mediterranean diets recommend macadamia nuts and nuts in general," said Dennis Simonis, president and chief operating officer of ML Macadamia. "It's a tremendous trend in this country right now. Macadamia consumption is up 46 percent in the United States, according to ACNielsen, which does consumer purchases."
The partnership, which owns or leases more than 4,100 acres of orchards on the Big Island, ended 2003 with earnings of $69,000, or 1 cent a unit, compared with a loss of $480,000, or 6 cents a unit, a year earlier.
In the 2002 fourth quarter, ML Macadamia lost $136,000, or 1 cent a unit. The company had earnings per unit of 5 cents in the fourth quarter of 2003.
Revenues rose 10.3 percent in the fourth quarter to $6.8 million from $6.2 million and 6 percent for the year to $15.4 million from $14.6 million.
Simonis said it was a pleasant surprise that the company received higher-than-expected nut prices from Mauna Loa Macadamia Nut Corp., which buys nuts from ML Macadamia under exclusive long-term contracts. Mauna Loa then processes and markets the nuts under the Mauna Loa brand name.
"For us, (the higher nut prices from Mauna Loa is) a huge thing," Simonis said. "We see it as a turnaround. This is the first year since the Shansby Group bought (C. Brewer & Co. subsidiary Mauna Loa in September 2000) that they've actually performed better than the previous year. We think the market is very strong and we think it should continue to show a strong performance."
In 2003, ML Macadamia received an average price per pound of 48.6 cents compared with an average price of 47.5 cents per pound in 2001. The U.S. Department of Agriculture portion of the nut price last year decreased 5 percent from the previous year but Mauna Loa's portion increased 18 percent from a year ago. 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 USDA macadamia nut prices.
"Macadamia nut prices are rising as demand continues to grow while supply growth has been slow in Australia and South Africa," Simonis said. "A weaker dollar has also reduced Australian exports to the United States."
In addition to citing higher nut prices for the company's year-over-year improvement, Simonis also singled out an increased level of contract farming activities. Contract farming revenue for the year increased 17.7 percent to $5 million from $4.2 million while macadamia nut sales edged up 1.2 percent to $10.5 million from $10.3 million.
Macadamia nut production for 2003 was 21.2 million pounds, down slightly from a year ago, primarily due to the continued drought in the Kau region of Hawaii and below-average rainfall in the Keaau and Mauna Kea orchards. Kau had 22 inches of rainfall last year, 58 percent below normal. Keeau had 58 inches, 71 percent below normal. And Mauna Kea received 117 inches, 80 percent below normal.
ML Macadamia also announced its was boosting its dividend 67 percent to 5 cents a unit from 3 cents a unit. The payout will be made May 14 to unit holders of record as of March 31.
