LONDON (Alliance News) - Orange producer Asian Citrus Holdings PLC said Wednesday it will shut down its Hunan plantation in China and will book a charge for doing so, hitting full-year results.
The company, whose plantations have fallen victim of late to two typhoons and a devastating orange disease which hammered its production yields, said a crop analysis was undertaken on Hunan by the Citrus Research Institute, the Chinese national research centre for citrus fruits.
The recommendations from the analysis called for significant investments to be made in Hunan and, given the added uncertainty on the actual outcome of any work the company would undertake, Asian Citrus has decided to shut down Hunan instead and terminate the land lease agreement. Operations at the plantation, in the Hunan Province of southern China, will finish by the end of May, it said.
Though Asian Citrus has not generated any revenue from Hunan since its inception in 2007, it expects to book impairments of CNY1.35 billion in the year to the end of June, which will hit its results for the financial year.
Asian Citrus said operations at its Hepu plantation has been in line with expectations. It is in the process of seeking cooperation agreements with local growers in order to diversify the risk involved in the plantation and cut costs. The Hepu plantation is in Guangxi Autonomous Region to the south west of Hunan, both just north of Hong Kong.
Shares in Asian Citrus were down 5.3% to 4.50 pence Wednesday.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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