NZ: Seeka profit hike a sign of Psa recovery

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NZ: Seeka profit hike a sign of Psa recovery

New Zealand-based Seeka Kiwifruit Industries (NZX: SEK) managed to exceed expectations for 2014 despite a tightening of margins, as the firm looks to ramp up post-harvest capacity and kiwiberry production. Kiwiberry - Flickr -  SimonQ錫濛譙

The kiwifruit grower-packer delivered a NZ$3.17 million result in profit after tax, which is slightly above initial guidance for a result between NZ$2.6-3 million.

The company highlighted that profitability was being rebuilt after Psa-V's devastation of the kiwifruit industry, with the 2014 figure representing a 38% rise year-on-year.

The performance was buoyed by the $1.4 million sale of Opotiki Packing and Coolstore Limited (OPAC), but that gain was more than offset by non-cash costs of NZ$1.85 million relating to first year of the new grower share scheme.

However, it is hoped the scheme will support long-term financial stability, as a response to a post-harvest services market where competitors were using price as a tool to compete for volume and in the case of cooperatives, ownership.

"Seeka’s response was not to follow the market to the bottom in terms of pricing, but as part of Seeka’s value proposition to off er a facilitated ownership to growers who were prepared to commit the entire crop off their orchard to Seeka for a period of three years," the company said in its annual report.

The post-harvest division's overall kiwifruit volumes were up 8.9% with a total of 21.34 million trays handled, as well as 496,000 trays of avocados and 18,000 trays of kiwiberries in the first year of production for the crop.

The company estimates its share of New Zealand's post-harvesting kiwifruit handling to have increased to 24.8% for the green Hayward variety, and fallen 10.6% in the case of gold kiwifruit.

"The fall in Gold handling share refl ects that some supplying orchards are mid-switch to Psa-V resistant varieties and is expected to rebound as the new fruit comes on stream," the company said.

The industry share of fruit handled in Seeka’s post-harvest facilities has increased to an estimated 24.8% in the case of Hayward kiwifruit and fallen to 10.6% in the case of Gold kiwifruit. The fall in Gold handling share refl ects that some supplying orchards are mid-switch to Psa-V resistant varieties and is expected to rebound as the new fruit comes on stream.

In the report, Seeka highlighted two major capital projects underway to increase capacity to handle the forecast increase in kiwifruit volumes, as well as several upgrades across its sites.

"The Oakside site is being optimised through a $5m upgrade, which includes additional canopy at bin reception, additional precooling for 400,000 trays, and additional coolstorage for 800,000 trays. The upgrade is being funded from cashfl ows and debt," the company said.

"The leased Pioneer cool store facility at Mount Maunganui is being upgraded to include additional pre-cooling for 400,000 trays and additional cool storage for 900,000 trays. This signifi cant project is being funded by our landlord.

"Planning for the volumes beyond 2015 is underway — all options are being considered, including the potential for New Zealand post-harvest operators to be enabled to supply fruit further down the supply chain into the market on a 'free-ontruck' basis. This model limits investment in under-utilised cool stores. The company is investigating expansion, at both existing and new sites."

In terms of the budding kiwiberry business, Seeka expects a substantial production boost this year.

"The kiwiberry crop is increasing. The Aguta Hort Gem Tahi (K2D4) has been grafted to a total of 13.85 hectares of orchards. The highest OGR for a full orchard in production exceeded $170,000 per hectare equivalent," the report said.

"Seeka has entered into a collaborative arrangement with the variety license owner Freshmax, which enables Seeka to market a proportion of the fruit.

"In 2014, the crop yielded approximately 18,000 trays and delivered exceptional returns to growers in full production. Volumes are expected to rise to 70,000 trays in 2015, and more in future years as orchards come into production," the report said, adding the variety continued to show no susceptibility to Psa-V and had good consumer demand in the berry category.

Photo:  SimonQ錫濛譙, via Flickr Creative Commons


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