2017/18 season results: excellent market performance lifts returns
Zespri has delivered an increase in value to growers, despite a season in which the volume of New Zealand kiwifruit sold
fell by 11 percent. The total fruit and service payment to growers increased by 6 percent to $1.47 billion. Zespri’s
global kiwifruit sales for the year were also up 6 percent, at $2.39 billion. Total revenue, which includes licence
income, was $2.51 billion.
Zespri Chairman Peter McBride notes the uplift in value reflects strong consumer demand and excellent market
performance.
“We sold a record volume of SunGold while growing returns at both per-tray and per-hectare levels. Supply of Green and
Organic Green reduced considerably from the exceptionally high volume of the previous year, but very strong consumer
demand more than offset the impact on per-hectare returns for Green and mitigated the impact on Organic Green
per-hectare returns.
“The industry’s performance during the last season reinforces our confidence in our strategy and potential for strong
and sustainable growth.”
Corporate result: licence revenues boost earnings
Zespri’s net profit after tax in 2017/18 increased by 38 percent to $101.8 million. The result was primarily driven by
revenues from the release of 400 hectares of SunGold licence in 2017, as part of Zespri’s continuing programme to fulfil
strong consumer demand.
The total dividend returned to shareholders was 76 cents per share, versus 25 cents per share in the previous season.
The payout included an additional interim dividend of 50 cents per share to distribute the majority of funds generated
through the 2017 SunGold licence round.
Sales volumes through the non-New Zealand supply segment, essential in enabling Zespri to serve consumers with premium
kiwifruit 12 months of the year, fell by 8 percent. Supply of Green was reduced because of a damaging frost in Italy.
However, SunGold sales in Italy increased to offset the fall, with the Zespri Global Supply business recording total
sales revenue of $264 million, up from $217 million in 2016/17.
Category result: Green and Gold returns increase
Mr McBride says that Zespri delivered a good sales result for Green. The average per-tray return for Green was
considerably stronger at $6.71 (2016/17: $4.36). “This was supported by good quality and low rates of onshore fruit
loss. The average per-hectare return for Green across the industry was $59,981, a new record for the category, and the
result was achieved in spite of a 27 percent decline in average yields.”
The result for SunGold gives confidence in our long-term outlook, adds Mr McBride. “Zespri achieved a strong increase in
returns at the same time as continued growth in volumes. Sales volume for the total Gold category rose by 9 percent to
52.1 million trays and the average return per hectare across the industry was up 16 percent at $114,345.” The average
return per tray was $10.06 (2016/17: $8.64).
The Organic Green return per tray was $8.93 (2016/17: $6.86), reflecting increasing demand in Europe and other major
markets and an improved market mix. The return per hectare fell 4 percent to $52,375 (2016/17: $54,427), impacted by a
26 percent decrease in average yields.
Zespri sold just over 1.2 million trays of Sweet Green. The average per-tray return was $5.61 (2016/17: $5.79) and the
average per-hectare return was $38,937 (2016/17: $45,853). The per tray result was affected by a smaller crop profile
and early season quality issues. The focus for the category remains on it being an early, high-taste offering to get the
Green season off to a strong start.
Industry structure: a stronger foundation
Mr McBride says that the 2017/18 season also marked progress in strengthening the foundations of the industry, through
how Zespri is funded and how Zespri is owned.
“Zespri shareholders backed changes to Zespri’s constitution in a Special Meeting in March 2018 to strengthen grower
ownership and control of the company. The new constitution addresses a problem of misalignment between growers who
supply kiwifruit to Zespri and people who own shares in Zespri and is critical for the stability of the industry
structure. Shareholder support for change was an outstanding reflection of the cohesiveness of our industry and of a
common interest among growers and former growers in seeing it prosper.
“The industry also agreed an enduring funding mechanism that ensures Zespri is funded appropriately, balanced against
the need for cost control so that the benefits of economies of scale are shared between growers and shareholders.”
One result of the enduring funding agreement in 2017/18 is that Zespri has increased the loyalty premium paid to
growers. This payment shares a portion of returns with growers who have long-term supply contracts with Zespri. The
total premium last season increased by approximately 3 cents to 28 cents per tray supplied.
Outlook for 2018/19
Summing up, Zespri CEO Dan Mathieson says, “The 2017/18 season represents good progress and outstanding work by the
Zespri team. We are now looking forward to growth in volume. We are anticipating record production of New Zealand and
non-New Zealand kiwifruit this year driven by increasing supply of SunGold and a recovery in supply of Green.
“Our challenge is to continue to lift our performance by staying focused on improving the execution of our brand-led,
consumer-focused strategy, supported by excellence in marketing and strong, connected partnerships with growers,
suppliers, distributors and retail partners.”
ENDS
About Zespri Group Ltd
With global kiwifruit sales revenues of $2.39 billion in 2017/18, Zespri is one of the world’s most successful
horticulture marketing companies and the Zespri brand is recognised as the world leader in premium quality kiwifruit.
Based in Mount Maunganui, New Zealand, we are 100 percent owned by current or past kiwifruit growers, and employ over
500 people in New Zealand, Asia, Europe and the Americas.
On behalf of our 2,500 growers in New Zealand and 1,200 growers based elsewhere, Zespri manages kiwifruit innovation and
supply management, distribution management and marketing of Zespri Green, Zespri SunGold, Zespri Organic, Zespri Gold
and Zespri Sweet Green Kiwifruit.