Psa sends Seeka Kiwifruit into a $7m loss

The Psa bacterial disease has taken its toll on Seeka Kiwifruit Industries' assets, causing the company to plunge into a $7 million loss for the 2011 year.

Te Puke-based Seeka, the biggest kiwifruit post-harvest operator, said the outbreak of Psa meant the carrying value of vines in the company's 105ha of gold orchards had been impaired, resulting in a charge of $9.7 million.

In addition, the board reviewed the valuation of post-harvest facilities (land and buildings), investments and goodwill in light of the downturn across the whole kiwifruit industry, resulting in an impairment charge of $8.8 million.

The one-off writedowns included Seeka's 20 per cent shareholding in Opotiki Pack and Cool (OPAC), whose assets have also been affected by the Psa infection.

As a result, Seeka reported an after tax loss of $7.1 million for the year ending December, compared with a profit of $6.4 million in the previous corresponding period.

Seeka's revenue from ordinary activities went up by 12 per cent to $137 million, and its cash-operating profit was nearly $21 million.

"That's still a reasonable number," said Seeka chief executive Michael Franks. "But the impairments reflect a reduction in the value of assets across the board. They are non-cash writedowns."

Seeka's asset backing is still $3.50 a share compared with the current share price of $1.

The Psa disease broke out in the Te Puke district in November 2010 and most of the infected orchards are in the Bay of Plenty region.

Seeka said its results for 2011 compared with a previous nine-month period due to a change in its balance date.

Earnings before interest, tax, amortisation, fair value adjustments and asset revaluations (ebitdaf) rose 4.6 per cent to $20.8 million compared with the previous corresponding period of $19.9 million.

Seeka said it was continuing to comply with all banking covenants and reduced debt by $9.3 million to $30.7 million.

Mr Franks said the company, which did not declare a dividend, had taken steps to reshape its business in response to the Psa disease and was continuing to work with orchard owners over developing long-term leases.

"We will continue to operate in the orcharding business and we now have to think about grafting the new G3 gold variety, understand what it means, and look at extending terms. Each lease is an investment in its own right," he said.

A restructuring process was completed in 2011 and 44 positions were removed from the company.

"While some progress is being made, Psa remains the cause of continuing uncertainty," Mr Franks said.

He said Seeka would maintain a "fiscally prudent" approach and would make debt repayment a priority.

It is also looking forward to another steady season. Seeka, which has a 22-25 per cent market share, expects to handle 21-22 million trays of kiwifruit, compared with 25.5 million last year. The gold kiwifruit supply is expected to drop from 6.4 million trays to 2.5-3.5 million.

"We are reasonably satisfied," said Mr Franks. "We've had a good level of sign-ups and grower commitment for 2012." Seeka will soon receive kiwifruit from 600 growers in the Bay and Coromandel.with APNZ