A revival in shares in Asian Citrus foundered as the group, China's top producer of oranges, unveiled a plunge in profits and ditched its dividend – offsetting thoughts of a "positive" ahead over the prospect of a change of leadership.
The group, which had braced investors for a fall in profits, said that its underlying earnings for the July-to-December half had tumbled by 84% to 41.0m remninbi.
Including one-off factors, notably an annual assessment reducing the value of its plantations, the group fell 548.0m remninbi into the red, compared with reported earnings of 212.4m remninbi a year before.
"The past year has been a challenging one," said Tony Tong, the Asian Citrus chairman and chief executive, who announced that he was, after 14 years, seeking replacement leadership.
However, while the earnings proved largely in line with market expectations, the group also revealed it was ditching its interim dividend, thanks to its weaker performance and a requirement to fork out for fertilizers washed out by heavy rains.
"In order to maintain production volume, we do expect a higher level of direct costs to be incurred in the short term to alleviate the leaching of soil nutrients caused by the heavy rainfall," Mr Tong said.
"There has been persistent heavy rainfall and major typhoons in the plantation regions and although there was minimal direct damage to the plantations from the major typhoons, this has caused nutrients to leach from the soil."
The cancellation of the payout "will be disappointing to shareholders especially in view of the still-positive operating cash flow of 117.7m remninbi and cash balances of 2.1bn remninbi", house broker Cantor Fitzgerald said.
However, the broker – retaining a "hold" rating on Asian Citrus shares with a target price of 22p - added that "whilst investors have benefited from Mr Tong's guidance over the years since the company was founded, the appointment [of fresh management] should be positive for the group".
Asian Citrus shares tumbled 8.5% to 13.0p in morning deals in London, coming close to the 13.0p level reached two weeks ago which represented the lowest since 2008.
The shares recovered some ground to stand at 13.85p in lunchtime deals, down 4.2% on the day.
Mr Tong, who founded the group, and has taken it into bananas and juices in an effort to diversify and reduce market risks, said that "have decided that now is the right time for new leadership to take the group forward.
"We are actively seeking a suitable candidate, who is well versed and experienced in China's business environment as well as international capital markets, to lead the group to a new era."
The decline in earnings in the latest period reflected - besides poor weather which helped cut group orange production by 8.3% to 148,000 tonnes - a 14.8% drop in sales prices reflecting increased competition and a food scare which curtailed demand.
Some unscrupulous market operators dyed fruit with cancer-causing red Sudan, usually used to colour plastics, to make oranges appear ripe, and gain premium prices from the early market.
Group revenues fell 16.1% to 748.3m remninbi for the half year, while production costs rose 7.8%, swollen by the need for extra fertilizer and agrichemical applications because of the wet weather.