Kiwifruit has sixth great year

By ELLEN READ and NZPA

A strong New Zealand dollar and high fuel prices are the main risks to Zespri's bottom line in the current financial year.

The kiwifruit marketing company yesterday reported its sixth year of record financial and marketing performance but warned of challenges ahead.

Chief executive Tim Goodacre said growers should budget on a $1 cost per tray from the currency and fuel effects but that overall returns per hectare should be stable due to a larger crop in the current year.

For the year to March 31, the average per tray selling price was $14.32, up from the previous year's $14.18.

He said the negative exchange rate impact put the current season behind the eight ball before it had even started but said the target was to increase volume while holding or bettering last year's price.

The group reported a 59.3 per cent increase in net profit after tax for the year ended March 31, up $8.5 million to $22.9 million.

The bumper result flows from higher net global sales, which boosted the company's margin return, aided by "prudent cost management".

Orchard gate return averaged $38,488 per production hectare, an improvement of 14.3 per cent from last year's $33,685.

The average orchard gate return per production hectare for each of the main products was green $37,593, organic $37,033 and $44,425 for gold.

Foreign exchange movements stripped $50.6 million from sales, equivalent to 78c per tray, but the impact would have been markedly worse had it not been for price rises in Europe and sustained strong pricing on the back of increased volumes in Japan.

Zespri's goal is to achieve compound growth of 10 per cent at the orchard gate through a combination of lifting organisational capability, building long-term strategic relationships with growers, post harvest and customers and by extending market leadership.

"While the performances of the 12-month procurement and processing business units did not meet expectations, overall Zespri's performance to March 31, 2004 was excellent," said chairman Craig Greenlees.

But he expressed disappointment with the results from new business units.

Zespri Fresh Produce suffered a shortfall of $423,354, which was underwritten by Kiwifruit International - although this loss was better than the $1 million plus deficit forecast earlier this year.

"While the 2003-04 [Zespri] performance delivered a very satisfactory result, there [is] room for continued improvement," Goodacre said.

He singled out the 12-month procurement problems, saying frosts in Italy and softening of fruit in California caused supply problems.

As a result, the year-round marketing policy is being reviewed but with a view to addressing the problems not questioning its viability.

"Providing a one stop shop for customers all year round is absolutely the right thing to do but we have to get the process working to deliver the prices and returns expected."

Zespri declared a fully imputed dividend of 50c (up from 20c last year) per share, amounting to $10.6 million ($4.2 million last year).

It will be paid in October to the company's 2517 grower shareholders and represents a return of 41.7 per cent on the original $1.20 share issue price.

Zespri said its record performance was driven by exceptional performances in Europe, Japan and East Asia, boosting net global kiwifruit sales to a new high of $911.1 million (up from $860 million), up 5.9 per cent, based on a total New Zealand delivered crop of 65.1 million trays (up from 62.2 million trays).

Goodacre said the first forecast for the current season would be made in August.