NZ: Seeka profits slid 44% in 2017
A steep decline in kiwifruit volumes and the loss of a banana supply contract contributed to New Zealand kiwifruit packer Seeka (NZX: SEK) registering a 44% year-on-year drop in 2017 net profit to NZ$5.8 million (US$4.2 million).
However, EBITDA from Seeka Australia rose by 119% to NZ$2.3 million.
The country's leading kiwifruit grower said reduced yields resulted in total volumes falling by 21%, including a 33% drop for Hayward.
"The scale of this reduction and its potential to significantly impact the company’s operational earnings was identified early. Seeka updated shareholders and took steps to minimise costs and maximise earnings," the company said.
Seeka explained these steps led to a better-than-forecast profit from operations than forecast given the sharp production decline.
"Seeka’s investment in new and upgraded plant, precooling and cool storage capacity in anticipation of higher crop volumes, particularly Zespri SunGold fruit, meant the company was able to optimise plant configuration and staff utilisation," it said.
"Growers benefited through record low fruit loss while operational efficiencies reduced costs."
The company said a "significant change" to the banana sourcing arrangements of one of its key retail customers generated a loss of NZ$2 for the retail services division.
However, Seeka said it "ended the year with an excellent operational result and enters 2018 with a strong financial and operational outlook."
This year the company is expecting a return to average Hayward kiwifruit yields along with a "steady increase" in SunGold volumes.
"The improvement programmes underway in Australia are expected to progressively improve earnings, and along with the anticipated increased New Zealand avocado earnings and continuing development of the Delicious Nutritious Food Company give Seeka a positive earnings outlook," it said.
"Seeka is anticipating an improvement to earnings at an EBITDA level of between 5% and 10%."
Seeka also mentioned it had handled a record 487,095 export trays during the New Zealand 2016-17 avocado selling season, more than double the previous year. The record volumes translated into NZ$24.85 (US$18.00) per-tray returns to growers, compared to NZ$26.86 in 2015-16.
For the 2017-18 avocado season, Seeka is forecasting a huge increase in per-export-tray returns in excess of NZ$40.00 (US$29.00).
Photo: Seeka Australia's Facebook page