Chinese orange plantation owner Asian Citrus Holdings reported a decline in production volume and predicted full-year results will be "significantly worse" than last year due to a citrus greening disease affecting its trees.
The AIM-listed company reported in a trading update that production volume of oranges fell by 75.5% to 31,935 in the 2016 financial year compared to last time.
The processed fruits business, which manufactures and sells fruit juice concentrates, purees and frozen fruits and vegetables, recorded production tonnage volumes lower than the first half of the year and the company said it continued to suffer margin pressure.
The Bermuda registered outfit said a core net loss for the second half year is expected to slightly improve compared to the core net loss of about ¥522m for the first half year.
The closure of Xinfeng Plantation in December 2015 reduced the margin impact of low production and increasing costs due to the spread of Huanglongbing disease, or citrus greening disease, at the plantation in the first half year.
It anticipates results for the 2016 financial year to be significantly worse off than that in 2015.
It is anticipated that turnover for 2016 will be lower and the core net loss for 2016 will be significantly higher than for 2015.
During the year Asian Citrus - which has been described as having the "unluckiest oranges in all of China" after attacks by canker, typhoons, hailstones and also accounting inquiries over the years - entered into 19 long-term cooperation agreements with independent farmers and an agriculture company to produce a range of other fruits in specific areas of its Hepu plantation and the company in turn, agreed to support them through land preparation as well as providing technical services and production advice.
These agreements, it said, will diversify the operating risk and enhance the efficiency of the Hepu plantation, which it expects will improve its financial performance. As part of the arrangements, the company also removed 619,213 orange trees with relatively low production yield for land preparation and it is expected to cost about ¥150 million for the 2016 financial year.
Shares in Asian Citrus, already down from 50p over the last five year to an all-time low of 3.25p earlier in 2016, fell 1.88% by lunchtime on Thursday to 6.01p.