Act attack angers apple export firm

WELLINGTON - Apple exporter Enza is worried that a new attack by the Act party may hurt it in international markets.

Enza is already under fire at home from growers demanding better returns and independent exporters crying foul over its power.

The producer board spinoff, a private company since April, last night scrambled to reassure international markets about its financial robustness after Act said it was in financial trouble.

The export apple industry is expected to earn about $700 million this year and employs more than 15,000 people during the peak of the season.

Enza chairman John McCliskie said Act's claims would go around the world and could seriously damage the company.

New chief executive David Geor said that coming at the peak of Enza's selling season, the claims were particularly irresponsible, and if the campaign continued would lead to destruction of prices and lower returns to growers.

Act is calling for deregulation of the industry, saying apple growers are going broke because of Enza's monopolist cost structure. It claimed Enza had a debt blowout of up to $40 million.

It said up to $7 million of growers' money had been used this year to prop up its Chilean operation, costing the average grower $3000.

Act said an independent valuation of Enza's coolstores was considerably less than Enza's valuation, and that the average Hawkes Bay apple grower exporting through Enza received only 68c profit a carton after tax.

The party said Enza's cost structure costs the average supplier $8 a carton. It says exporters who operate independently of Enza for the first time this year will pay their growers on average $8 more a carton than Enza.

Mr Geor said Act's financial claims were "ill-informed, wildly inaccurate and misleading garbage."

Enza said its long-term core debt was $50 million, unchanged from last financial year. The amount would be lower at the end of this season. As of yesterday, it could borrow another $100 million.

It had short-term borrowing capability of $365 million and by the end of this financial year its equity would be more than twice its debt at $110 million.

"By any measure, this is a strong financial position," said Mr Geor.

Enza was forecasting an operating profit before abnormals of $5 million to $7 million.

Abnormals were losses of $10 million to $15 million on a Napier port project and on foreign exchange.

- NZPA