Kiwi market a little hairy
Seeka's wild ride in horticulture's stormy half year
oughing it out” during a maelstrom of events from weather damage, extreme worker shortages and soaring costs to lower fruit yields enabled listed horticulture group Seeka to lift its net profit and revenue for the first six months of FY22.
Unaudited net profit at $21.5 million for the half year to June 30 was 4.3 per cent up on the same period last year, on the back of a 10.2 per cent lift in revenue to $247.3m.
Profit before tax at $30.1m was down 2.3 per cent. Earnings before interest and tax were up 2 per cent at $35.4m. Ebitda at $49.4m was up 5.3 per cent.
No mid-year dividend will be paid. Chief executive Michael Franks, discussing a highly challenging six months, said while the company was dealing with myriad external issues and uncertain market returns, it was not prudent to pay a half-year dividend.
Seeka, which has kiwifruit, avocado and kiwiberry orchards throughout the upper North Island and a network of packhouses and coolstores as well as Australian operations, had “hunkered down, toughed it out and focused on the immediate job of optimising its operations and results” in a volatile environment with significant inflationary pressure and key markets affected by geopolitical events, Franks said.
Labour was extremely tight, fruit quality unseasonably poor creating industry-wide issues, and fruit volumes lower than expected. A late 2021 wind storm in Opotiki had resulted in the loss of kiwifruit and at least $10m in expected extra earnings “didn’t turn up” due to seasonal events.
The company had not lost any of its 600 growers, Franks said.
“We have handled about the same volume we did last year despite some acquisitions. The increase in volume we would have expected from these acquisitions haven’t turned up in our packhouses because yield has fallen.
“Next year we expect six to seven million more trays to go through the business.”
The new businesses were integrated and ready to deliver.
The second half of the financial year would likely be no less challenging.
Full-year net profit before tax was expected to be between $9m and $11m. Net profit before tax in FY21 was $23.5m but had included a $7.6m settlement payment from the government over a kiwifruit industry claim.
Total assets at $594.4m were up 14.5 per cent on the previous period. Net interest-bearing debt of $161.3m was up $33.4m after the purchase of the Orangewood and NZ Fruits businesses.
New Zealand orchard operations revenue at $45.6m was down by nearly $8m reflecting lower crop returns over kiwifruit and avocado. Ebitda for the period totalled $5.087m compared to $5.658m, reflecting lower revenues from markets and higher costs.
Franks said Seeka’s labour costs had risen at least 10 per cent and transport costs by around 12 per cent in the period.
“We had at least $500,000 in costs associated with scrambling to counter the short labour force.”
Seeka grew 17.1m trays of kiwifruit compared to 14.4m in the same period last year.
Seeka grew 1.6mkg of avocados and 116,400kg of kiwiberries on orchards it owns or manages.
The new avocado season has just started.
Franks said it had begun slightly earlier than usual and the harvest volume was expected to be average. The main export market is Australia.
Seeka post-harvest operations packed 43.3m trays of kiwifruit, up on 40.7m trays in the same period last year. Post-harvest revenue at $178.5m increased from $145.2m. Ebitda was $52.8m compared to $49.12m.
Seeka Australia, owned by the group, leases and operates kiwifruit orchards, and owns and operates nashi and pear orchards across the Tasman with post-harvest facilities in Victoria. It markets products domestically and to export.