NZ: tough weather batters T&G results in H1
New Zealand-based produce company Turners & Growers (NZX: TUR) had its income slashed by 38.7% year-on-year in the first half of 2014, despite a 22% improvement in its pipfruit division's operating profit.
The NZ$10.2 million (US$8.6 million) after tax profit result represented a more accentuated fall than the 7.6% reduction in revenue to NZ$340.96 million (US$289 million).
The profit fall would have been less pronounced if it weren't for the fact T&G sold NZ$1.3 million (US$1.1 million) worth of properties during the same period in 2013.
In an announcement to the New Zealand Stock Exchange, the company said the apple deal had a an improved start to the year with increased volumes into markets, along with favorable pricing in Asia and premium prices for its flagship Jazz and Envy varieties in Europe and the U.K. In contrast, 'commodity' varieties were put under pressure.
"The US market started strong across all varieties and exports into the Group’s prime Asian markets - Thailand, Vietnam, Singapore and Hong Kong have increased," chairman Klaus Lutz, who is also CEO of German parent company BayWa (DE: BYW).
"Additionally ENZA’s global apple programme in the Northern Hemisphere has had a solid finish to the season."
Lutz expected the acquisition of Apollo Apples would add 20% to the pipfruit division, however the purchase is still pending and therefore its results were not included in the consolidated group result for the half.
Meanwhile, production issues for certain crops in New Zealand, Australia and Chile put the group under strain.
"The International Produce division experienced a difficult first half of 2014. Supply shortages in most of the regions led to a 13% decrease in revenues. New Zealand sourced cherries, berries and stonefruit decreased markedly compared to 2013.," Lutz said.
"Spring frosts in Chile resulted in heavily reduced volumes of stonefruit and grapes available for export.
"Additional volume reduction arose from a poor growing season for Australian stonefruit and a lower New Zealand kiwifruit crop from the Group’s orchards in Kerikeri."
In addition, he said worldwide overproduction reduced export opportunities for Peruvian asparagus.
On a more positive note, the international division registered "very competitive" exports to the Pacific Islands, while exports of berries, salads and stonefruit from the U.S. increased "remarkably" due to favorable growing conditions.
The smaller New Zealand Produce division had an improved result of NZ$0.7 million on the back of good performances for hothouse tomatoes and citrus.
The company's processed foods division has underperformed year to date with less fruit available due to the 'outstanding' quality of New Zealand's apple crop, according to Lutz