Zespri sounds warning after strong year

Zespri CEO Lain Jager. Photo/file

Kiwifruit marketer Zespri enjoyed a strong year in 2014-15, but faced "headwinds" in the year ahead from weakness in the euro and yen, chief executive Lain Jager (pictured) told the annual meeting on Wednesday.

The return of Chile to the market after its biggest southern competitor bounced back from severe, crop-damaging frosts also had an impact, he said. The grower-funded global marketing organisation has enjoyed a strong bounce-back after the sector was ravaged by the effects of the Psa virus in 2010, with increased volumes and good grower returns recorded for the year just passed.

Mr Jager said that foreign exchange continued to affect grower returns over the financial year ended March 31, before the New Zealand dollar started to fall sharply, reducing payments by $58.1 million in 2014-15. However Zespri's hedging policy offset the strength of the NZ dollar by $103.7 million compared to the spot rate, he said. "While Zespri is very positive about the outlook for delivering strong, sustainable returns to growers and shareholders, we note considerable headwinds weighing on future returns including the relative weakness of the euro and yen and recovery of Chilean volumes," he said.

Zespri chairman Peter McBride said the organisation had had delivered $1.57 billion of sales in the 2014-15 season, up 16 per cent on the previous year. Total fruit and service payments for the season were up 17 per cent to $939 million. Sales volumes were up 11 per cent to 95.2 million trays, and were set to grow to over 130 million trays in the next five years. "As well these headline numbers, Zespri delivered excellent returns to growers and developed sales platforms for the increasing gold volumes in both new and existing markets," said Mr McBride.

Taste is the key reason for strong repeat purchases, and this season has seen SunGold taste improve dramatically from the previous two seasons.

Daniel Matheson

The Psa tolerant SunGold (Gold3) had performed very successfully on the orchard, throughout the supply chain and in the market. Gold volumes were set to grow from 18.7 million trays in 2014-15 to around 30 million trays in 2015-16 to over 60 million trays by 2019-20.

Volumes of non-New Zealand gold were also set to grow strongly and provide consistent year-round supply, forecast to grow from 2.5 million trays in 2014-15 to around 15 million trays in 2019-20, largely from Japan.

President of global sales and marketing Daniel Matheson told the AGM SunGold had experienced an excellent start to the season with sales moving faster than forecast. "Taste is the key reason for strong repeat purchases, and this season has seen SunGold taste improve dramatically from the previous two seasons," said Mr Mathieson, who recently moved from Japan to a new global sales hub in Singapore.

Zespri results

- Net profit after tax doubled from $17.2m in 2013-14 to $34.6m in 2014-15.
- This included an exceptional one-off factor of $19.6m of unpaid revenue from new cultivar licences from previous years.
- Excluding this figure. Zespri's normalised profit would have been $21.5m.