Deloitte Top 200: Most Improved Performance - Zespri

By Graham Skellern

The sun is shining on the kiwifruit orchards in Bay of Plenty and elsewhere. The ravages of Psa have almost become a distant memory -- though growers have had to instigate strict orchard management systems to control the bacterial vine disease.

After the successful Gold variety was all but wiped out by Psa, the more tolerant SunGold has proved to be a very adequate substitute.

The bulk of the SunGold was planted more than three years ago, and the crop is reaching full production, providing a big boost to Zespri's overall performance.

Deloitte Top 200 judge Cathy Quinn said Zespri won the Most Improved Performance category because of the extent of its positive and dramatic turnaround following the Psa crisis, the way the crisis was managed, and the fantastic returns now being delivered to growers.

Along the way, Zespri has had to manage dissident voices and difficulties in China.

"From the judges' perspective, it's a great New Zealand co-operative success story."

Quinn said Zespri and its growers were devastated back in 2010-11 when they were hit by Psa just as they were gaining traction with their new Gold16a variety.

"SunGold has achieved price premiums over gold and international competitors across the world on the back of these (latest) returns, orchard values have skyrocketed and in some cases well more than doubled," said Quinn.

During its 2015-16 financial year, Zespri and the New Zealand kiwifruit industry achieved several records -- the highest-ever Green return per hectare, the largest-ever volume of sales in a season, and the biggest-ever total return to growers.

The fruit and service payment for New Zealand-grown fruit, including the loyalty premium, was $1.143 billion, a 22 per cent increase on 2014-15. Zespri sold 117 million trays of New Zealand kiwifruit -- nearly 22m trays more than the previous year.

The sales included 32.3m trays of SunGold, up 74 per cent from 18.6m in 2014-15, and 80m trays of Green, up from 69m. Zespri expects to sell 82m trays of Green and 47m trays of SunGold this season, and its total revenue will soar past $2 billion.

From the judges' perspective, it's a great New Zealand co-operative success story.
Cathy Quinn, Deloitte Top 200 judge

In the 2015-16 financial year, Zespri also sold 14m trays of non-New Zealand kiwifruit, taking its global kiwifruit sales to a record 131m trays, a 21 per cent increase.

The upshot was Zespri recorded a strong net profit of $35.8m, an increase of $1.2m on the previous year. The average New Zealand-grown orchard gate return per hectare was $60,758, up from $57,369, and Green was a strong performer.

Zespri chief executive Lain Jager said earlier that New Zealand kiwifruit growers have responded to the challenge of growing in a Psa environment by improving orchard management practices.

"Psa is not holding the industry back and Hayward Green and SunGold are pretty tolerant.

The growers had no choice but to be pro-active and they have been successful in managing Psa. As a result they have seen increased productivity from their orchards."

Zespri has set a bold target of selling 200m trays of New Zealand-grown and overseas-grown kiwifruit by 2025, producing global revenue of $4.5 billion.

Finalist: Kathmandu

New product, reduced inventory levels and careful management of promotional activity all contributed to an improved performance by retailer Kathmandu during its 2016 financial year ending July 31.

Kathmandu, which operates in New Zealand, Australia and United Kingdom, increased sales by 4 per cent to $425.6 million and recorded net profit of $33.5m, an increase of 64 per cent on the $20.4 million achieved for the 2015 financial year.

Watch: Most Improved Performance finalist - Kathmandu:

Video

Kathmandu chief executive Xavier Simonet says the sales growth was achieved at higher gross margins as a result of product newness and careful management of promotional activities.

"Cost efficiency and improved working capital management have also contributed to a successful year -- the results exceeded expectations."

The Deloitte Top 200 judges felt that Kathmandu has" been well managed and the results have followed", including a significant lift in the dividend payout.

Simonet said the Just Enough forecasting and planning system, installed in the 2014 financial year, created more accurate buying to reflect store range differences and efficiencies in the company's supply chain.

Five new stores, four in Australia and one in New Zealand, contributed to the sales growth -- though United Kingdom sales declined with the closure of three stores during 2016. Total sales in Australia were $278m and in New Zealand $142m.

Simonet said Kathmandu will strengthen the distinctiveness of its brand and open up opportunities in international markets as well as on social, digital and online channels.

Finalist: Trade Me

Trade Me's significant investment over the past three years has resulted in revenue and earnings growth and created a positive momentum for the future.

Trade Me strengthened its business by almost doubling staff numbers, increasing its marketing spend, improving its product offers in the Marketplace and Classifieds businesses, and enhancing its sales capability.

Watch: Most Improved Performance finalist - Trade Me:

Video

One of the improved offers was the reviews and news sections for Trade Me Motors to assist car buyers with their research.

During this period, Trade Me also improved its mobile offer as 60 per cent of total sessions are now conducted through this platform. The company released its new iOS app to all users in July this year, providing an updated Trade Me experience for both iPhone and iPad users.

For the full year ending June 2016, Trade Me's revenue climbed 9.2 per cent to a record $218 million, driven mostly by a 13 per cent increase in revenues from the Classifieds businesses, Property, Motors and Jobs. The net operating profit was up 3.5 per cent to $83m.

Trade Me expects total revenue to grow at a similar rate during the 2017 financial year -- "we will continue to derive benefit from the investment we have made and we are better placed than ever to capitalise on the opportunities in front of us."

Jude Cathy Quinn said Trade Me had grown net revenue and profit after a period of flat market performance. "It has invested and grown its core business in property, markets and cars, as well as investing in new areas. It has also introduced a mobile strategy recognising the number of transactions now conducted by mobile."

- NZ Herald

Deloitte Top 200 2016 rankings: Zespri 21, Kathmandu 80, Trade Me 131.

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