NZ: T&G Global's profits drop despite revenue rise in "challenging" year

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NZ: T&G Global's profits drop despite revenue rise in

New Zealand's largest fruit company, T&G Global, experienced a 63% year-on-year drop in profit during 2018 to NZ$8.3 million despite an 11% uptick in revenue to NZ$1.9 billion.

CEO Gareth Edgecombe said that overall 2018 was a challenging year for the company, impacted by adverse market conditions, climatic events including a poor growing season for apples and the impact of Chinese tariffs.

In addition to the external factors, he said the financial results "could have been improved through tighter operational execution".

The 2018 New Zealand apple growing season was made challenging mainly by high temperatures late in the growing season which saw reduced fruit pressure and larger sizing.

However, T&G's Jazz and Envy apple brands continued to grow around the world, driven by a global market development network and a global growing program.

Envy sales in particular are expected to grow strongly in Asia in the coming years, and the company also noted that the investment in Envy orchards in the U.S. state of Washington is now yielding fruit, with volumes set to double this year.

In Europe, a strong demand for premium apples was heightened by a lower than average supply of Northern Hemisphere grown fruit. The
pipfruit division capitalized on this demand and returned a strong result from selling into its European markets which partly compensated for the weaker performance from North America.

For the international division, T&G said adverse weather conditions resulted in a poor cherry season in Australia, and challenging climatic conditions in Peru caused quality issues for the grape harvest. Despite this, the business segment saw an increase in its operating profit of NZ$3.1 million from 2017 to 2018 due to favorable trading conditions in most of its markets, particularly in the Pacific Islands.

It experienced poor performance in its tomato business, with unfavorable growing conditions in the first half of 2018 and an oversupply in the second half.

T&G says it has turned its focus to growing its core businesses, which led it to divest several non-core businesses and investments during the period. That included the sale of ENZAFoods to Cedenco Foods New Zealand and the sale of its Kerikeri-based kiwifruit orchards, post-harvest facilities and business assets to Seeka.

Looking ahead, T&G said the near-term future global trading environment remains uncertain, particularly with regard to Brexit and the U.S.-Chinese trade dispute. However, it remains confident that the changes it is making will allow it perform strongly in the years ahead. 


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