Fruit quality costs and losses hit Zespri's bottom line hard. Photo / Supplied
Fruit quality costs and losses hit Zespri's bottom line hard. Photo / Supplied
New Zealand kiwifruit export marketer Zespri is forecasting a slump of up to $144 million in its corporate net profit after tax for the 2023 financial year compared to last year.
Zespri has also confirmed it will proceed with plans to list on the NZX late this year.
Only growerswill be able to own the listed shares, as per the current restriction on shareholding. Zespri will not be seeking to raise capital as part of the listing.
The company, which has the statutory right to export all New Zealand kiwifruit except to Australia, has told growers its forecast range of net profit after tax for the year ending March is $217m-$227m. Last year’s net profit after tax was $361.5m.
The new forecast includes income from selling licences to grow varieties except for Hayward or green fruit, which doesn’t require a licence.
Last financial year Zespri took in $430.1m from licence revenue, plus $6.6m from other licences.
The bottom end of the new forecast range is below the Tauranga-based company’s November 2022 forecast.
Zespri said the forecast net profit dip was due to quality costs associated with New Zealand export fruit issues, and a reduction in non-New Zealand supply volumes.
Zespri is supplied by more than 2500 New Zealand growers but also contracts orchardists overseas to grow its branded fruit so it can provide year-round fruit supply in offshore markets.
The company warned growers in January they could be in for a $35 million-plus hit in the pocket due to “much worse” fruit quality than expected in the 2022 season’s final shipments.
A new orchard gate returns forecast last month was particularly bad news for green fruit growers, whose per tray forecast for 2022-2023 dipped from $6.13 in November to $5.55.
The forecast for SunGold kiwifruit returns was less grim. This variety was forecast to return $9.79 per tray compared with the November forecast of $9.81.
Zespri expects to return a total fruit and service payment to growers of $2.16 billion for the 2022-2023 season.
The company has attributed the fruit quality and loss cost issue to last year’s severe labour shortage at all levels of the industry and weather events leading to softer fruit which didn’t travel and store well and handling issues. In Japan, one of Zespri’s most important markets, the quality issue led to that country being undersupplied by more than a million trays.
The 2023 kiwifruit harvest is under way with total grower returns forecast to top $2 billion. Photo / Supplied
The 2023 harvest has begun with the industry expecting a significantly smaller crop due to a devastating frost late last year and weather events.
In an update to growers, Zespri said this year’s harvest would be “incredibly challenging” due to the impact of February’s Cyclone Gabrielle on growing regions.
Zespri has also confirmed executive structure changes.
It has created the role of chief operating officer with end-to-end responsibility through the supply chain from grower to customer.
Executive officers for Europe and North America, Greater China and Asia Pacific will be elevated to “presidents” of their territories and report directly to chief executive Dan Mathieson.
The role of chief market performance officer will be disestablished after a transition period.
Zespri chairman Bruce Cameron signalled at the end of last year that an NZX listing was being considered as part of the company’s efforts to strengthen grower shareholding. Offshore growers cannot hold shares.
Just 48 per cent of Zespri’s New Zealand growers are shareholders these days.
A range of initiatives was proposed for introduction in 2023 and 2024 to improve grower-share alignment and an NZX listing was a prerequisite for many of them, Cameron said at the time.
Zespri is the world’s biggest single marketer of kiwifruit. China is the world’s largest kiwifruit grower.
Total Zespri sales volumes in 2021-2022 were 201.5m trays of New Zealand and non-New Zealand kiwifruit, an 11 per cent increase on the previous financial year.
Global revenue generated by fruit sales increased by 12 per cent to $4.03b.
Overseas-grown Zespri fruit totalled 26.5 million trays, up from 23.5 million trays the previous year, with revenue increasing from $472.8m in 2020-2021 to $537m in 2021-2022.
