Seeka Kiwifruit Industries
Six Months to 30 June 2015 [Unaudited]
Directors and management are pleased to present Seeka’s financial results for the six months to 30 June 2015. It was a
challenging six months for the Company with a fire significantly damaging Seeka’s Oakside post-harvest facility just
prior to harvest, then having to focus on managing a record 27.7m trays of kiwifruit; the first major lift in production
since 2011’s previous high of 27.1m trays.
Profits are up. Profit before tax this half year is ahead of the previous corresponding period (pcp) by $2.87m [+115%]
at $5.36m, reflecting record kiwifruit volumes handled by post-harvest along with good earnings achieved by the orchard
division. The half year results include an allowance for the full second year cost of the three-year grower share scheme
totalling $2.55m. The results also include the costs of the impairment of the destroyed buildings at Oakside and the
insurance proceeds to date. The net impact at the six months of these two items is a $143,000 addition to profit. Later
when the insurance claim is finalised and settled, a one-off gain is likely to arise which could be available to fund
any further reinstatement or other costs associated with the fire.
Kiwifruit volumes are up. Hayward volumes handled by post-harvest increased by 3.9m trays while market share remained
steady at 24.8%. Zespri SunGold volumes increased by 2.8m trays with market share up from 10% to 14%. Further growth in
Zespri SunGold volumes are anticipated as orchards continue their recovery from Psa-V.
Our facilities were fully utilised this year with a record 27.7m trays handled compared to 21.2m trays in the pcp.
Margins have been maintained. The post-harvest environment remains competitive. Seeka has strived to deliver competitive
pricing for services to growers understanding that many growers are still recovering their financial positions after the
devastating effects of Psa-V. While margins have remained tight, the greater volumes of fruit delivered the benefits of
scale to both shareholders and growers. In 2015, supplying growers delivered an exceptional crop. Exceptional yields of
largely good quality fruit make the post-harvest job easier.
Seeka continues to focus on infrastructure expansion and careful capacity planning to ensure adequate capacity for
anticipated volumes. There is little alternative to further investment in New Zealand infrastructure considering the
industry’s inertia to implementing offshore handling and storage, and limited collaborative marketing opportunities.
Seeka remains well prepared for investment with low core debt and unutilised debt facilities.
Orchard earnings are increasing. As New Zealand’s largest kiwifruit grower, Seeka benefited from record Hayward yields
and new Zespri SunGold volumes. Seeka’s long term leases are returning to profitability following intense reinvestment.
While Zespri’s forecast market returns are down, total orchard returns are supported by higher yields across all
varieties. Orchard costs continue to be under inflationary pressure and per tray orchard returns volatile.
New business delivers incremental earnings despite being seasonally affected. The New Zealand banana business remains
very competitive with large volumes of fruit depressing wholesale prices resulting in lower than anticipated returns to
Glassfields. New supply lines to retail have opened for domestic supply of kiwifruit and avocados. SeekaFresh earnings
have been affected by an earlier avocado selling season and lower volumes. Market prices were lower in the first quarter
of 2015, however Seeka’s performance delivered supplying growers incremental returns, leading the market in grower
returns for the second year in a row.
Seeka continues its growth strategy through operational growth and acquisitions that deliver accretive value. Our
foundation and principal focus is kiwifruit. We will continue to pursue excellence and strive for improvements in this
our core business. Our strategy is to build on that foundation and our vision is to become “New Zealand’s Premier
Produce Business”.
Seeka continues to pursue excellence in its core business and will continue to strive for improvements to make it the
best of breed in our kiwifruit business. Seeka will continue to look for opportunities to innovate and expand or
diversify to secure long term growth and sustainable profitability. At the same time the Company will review its asset
base to ensure that our operating assets and investments are aligned to our strategy and commercial drivers.
Full release: seeka_6_monthly_2015_announcement.pdf