Zespri looking at $13m to $15m profit

The 2013 season remains on track to return the highest-ever average per-hectare Green return to growers. Photo/File

Zespri International has advised kiwifruit growers that the board has approved a net after tax profit forecast in the range of $13 to $15 million for the financial year to March 31, 2014.

The forecast is well up on last year's actual after-tax profit of $7.6 million, but that included provisions for Psa funding as well as legal costs from the invoicing issues in China.

The 2013 season remains on track to return the highest average per-hectare green return to growers so far, and returns are up for all categories on the December forecast except for Green14, which remained steady, says Zespri.

Chairman Peter McBride attributed the improved result to better returns in Europe and reduced in-market losses of fruit, as well as the overall lowering of costs resulting from the recent competition in the post-harvest sector.

"The change in the forecast is mainly a result of improved returns in Europe," said Mr McBride.

"By not selling as late in Europe, having good quality fruit, and having a much better performance in the market in terms of fruit loss, that reduces a lot of the cost, which flows through to the OGR [orchard gate return]."

Zespri was estimating OGR of $5.23 for green, $7.00 for organic green, $12.60 for gold and $9.63 for green14.

The forecast also followed an excellent season selling Northern Hemisphere fruit, with Zespri sales of Italian fruit in China being a highlight.

Mr McBride said that a lot of the credit lay with the post harvest sector's performance, reinforced by strong underlying demand.

"It's very good for the confidence of the growers," said Mr McBride, who noted that the result had also been achieved with a slightly lower fruit size profile than hoped for, a result of the dry summer. With bigger fruit, OGR would have been even better, he said.

"Your pricing is a lot more difficult on small sizes because you are competing head on with the Chile."

Mr McBride said that estimates were based on past performance and records and, while Zespri aimed for accuracy, forecasts tended to be on the conservative side.

"But if we look at the reduction in costs, it's been a stunning result in Europe this year."

In addition, volumes of the more profitable Gold variety were forecast to increase in the coming season.

Neal Trebilco, growers president of New Zealand Kiwifruit Growers Inc, also praised the improved post-harvest and in-market performance.

"Obviously there have been significant savings offshore.

"This is on the back of very low fruit loss onshore and in this case offshore, so in this case it's lowered costs quite significantly.

"There is already good confidence amongst the growers. This will just renew that confidence," he said.