T&G boosts operating profit in 2019 amid "continued transition"
New Zealand-headquartered T&G Global says its 2019 financial results demonstrate progress on its three-year roadmap for growth, with improvements in its underlying business despite a difficult operating environment.
CEO Gareth Edgecombe says 2019 was a year of continued transition for the company as it creates the foundation for strong growth and improved financial returns.
“With consumers increasingly seeking out healthier foods, the growing global population and the premiumisation of global produce, T&G sits in a position with significant potential,” says Edgecombe.
“To unleash our full potential, our business has to evolve. In 2019, our team put in a lot of hard work to turn around our business, and while we have some way to go until we’re delivering to our full financial potential, it’s pleasing to see the green shoots coming through.”
He added that while a number of factors adversely impacted the overall financial result, the underlying performance of the organization is "showing improvement".
“Our operating profit for the year increased to NZ$16.5m, compared to NZ$15.6m in 2018," he said.
"This increase came despite incurring NZ$7.1m in costs relating to the reorganisation of our business, strategic transactional activities and the Holidays Act remediation.”
Revenue was maintained at NZ$1.2bn, the same level as 2018, with profit for the year at NZ$6.6m, compared to NZ$8.3m in 2018.
In many of its key export markets, including Asia, the U.S. Australia, the U.S. and the Pacific Islands, T&G experienced strong sales and margin growth.
“Our International Produce division had a strong close to the year, increasing revenue by 14%, to $305.1 million, largely driven by our Asian trading business boosting revenue by $40.6 million," Edgecombe said.
“A critical aspect of realising the potential of our Apples division, is the increased focus on premium varieties. In 2019, this saw us re-planting some orchards which, while vital for setting us up for the future, had a cost impact.
"This, combined with weather challenges and an oversupply of commodity apple varieties in the European market, impacted our Apples revenue. Strong sales in North America and the United Kingdom partly offset this, resulting in a 1% decline in revenue for our Apples division, to $656.9 million."
Edgecombe said freeing up capital to reinvest in growth is central to T&G’s strategy.
“This year, we sold our Mt Wellington site in Auckland for $65.0 million. By divesting non-core assets, we’re able to invest our cash more productively into new capabilities and future growth opportunities.
He added that a key part of the T&G growth strategy is our planned acquisition of the New Zealand domestic fresh produce division of Freshmax New Zealand.
“Looking to the year ahead, we will focus on delivering improved shareholder returns by harnessing our vertical model strengths, from genetics and growing, through to sales and marketing, to strengthen our existing categories and develop our emerging categories of blueberries and grapes,” says Edgecombe.