A bonanza New Zealand apple season which delivered significantly better fruit sizes, volumes and quality, plus Covid 19-driven demand in some international supermarkets made T&G Global's apple business the star performer of a much improved 2020 financial year.
The apple business delivered a revenue increase of 24 per cent to $875.2 million for the year to December 31, which along with efficiency gains, boosted this division's operating profit by 56 per cent, from $33.5m in 2019 to $52.1m.
T&G's major New Zealand apple markets are North America, Asia and Europe. The improved apple crop helped offset a reduction in packhouse throughput and increased supply chain costs due to Covid-19.
Total net profit after tax for the group was $16.6m, up from $6.6m in 2019.
Total group revenue was $1.4 billion, compared with $1.2b the previous year.
Operating profit was $32.4m, against $16.5m in 2019.
Chief executive Gareth Edgecombe said the year had been one of extraordinary Covid 19-related challenges, with international lockdowns and operations procedure changes affecting the daily running of the business. Some international wholesale markets had closed and complexities around importing and exporting added to the difficulties.
The financial results followed a concerted transformation over recent years to become customer-led, to deliver value from intellectual property and build a high-performance culture, he said.
The apples business had an "outstanding" year with the New Zealand Envy variety sold out ahead of the arrival of northern hemisphere fruit due to strong consumer demand.
A focus on the best genetics, building premium brands and delivering strong sales in Asia while optimising its supply chain had all contributed to T&G's strong result, he said.
The acquisition of Freshmax New Zealand's fresh produce division for $27.9m in April last year to create T&G Fresh resulted in a revenue increase of $75m to $357.7m during the year.
The company would be a leader in creating a strong, sustainable customer-led sector in Aotearoa, said Edgecombe.
It had not made a decision at this stage regarding any additional (final) dividend, he said.
T&G Global is 74 per cent owned by German group BayWa Aktiengesellschaft. Formerly known as Turners & Growers, its New Zealand legacy dates back to 1883 when Edward Turner established a fruit and flower shop in Auckland.
Hong Kong's Wo Yang Ltd owns 20 per cent. Small New Zealand shareholders make up 95 per cent of the remaining shareholders.
During FY20 the company's Nayland Rd, Nelson post-harvest facility was sold for $50.5m. It is being leased back. The proceeds would help fund growth initiatives and be invested back into T&G.
The international trading division posted a 21 per cent drop in revenue, from $226.5m in 2019 to $178.7m. The operating result however increased from $800,000 in 2019 to $2.3m.
The company said while revenue from the North American business was solid and Asia saw some uplift, the fall was largely due to difficult trading conditions in Australia as a result of the coronavirus pandemic.
The company's grape farm in Peru experienced the region's worst drought since 2002.
A good crop was harvested due to past investment in water storage and supply, but fruit quality was affected which affected average selling prices.
Total assets increased from $854.2m to $980.7m, mainly driven by the Freshmax NZ acquisition and further orchard redevelopments. Another contributing factor was the revaluation of assets (38.9m) offsetting the effect of the sale of the Nelson property.
Total liabilities increased by $81.2m, reflecting mainly additional lease liabilities from the renewal of orchard land leases and the leaseback of the Nelson property sold in December.
Capital expenditure during the year was $46.8m, up $7.3m on 2019. This reflected the focus on growing the business, along with more orchard developments and capital improvements.