Mixed fortunes for processor

Satara boss Brian Bilas paid a rebate to kiwifruit suppliers while investors watched their shares lose value. Picture / Fotopress

If Satara chief executive Brian Bilas could wish on a star, he would probably plump for financial returns which equally favoured his investors and his suppliers.

Grower-shareholders in the Te Puke-based kiwifruit processor have profited from higher rebates, but investor-shareholders have borne the brunt of a drop in income from single-desk seller and marketer Zespri.

At the start of a new season, Satara has its work cut out.

The heady days in December, when it listed as a member of the New Zealand Alternative Exchange (NZAX), are over.

At its listing, NZX market development manager Geoff Brown lauded the company.

"Its two-tiered share structure, which acts to protect the co-operative shares while providing a platform for liquidity and potential future capital raising, is a model that will serve as a compelling example to other primary industry-based companies in New Zealand," Brown said.

Satara's bottom line is vulnerable to the effects of frosts and rain on its crops.

Along with the uncertain impact of the weather, Satara has a more direct threat to counter this year - the likelihood of a further drop in income from Zespri.

Bilas says lower payouts will again affect the industry as a whole.

He is confident, however, that the company will be partially insulated by a strategy of "sensible management, steadily working to plan, and further improved plant and packhouse efficiencies".

Satara has announced a 14.6 per cent increase in operating profit before tax and rebates, to $4.2 million for 2004.

Bilas attributes the profitable year to packing a record 11.1 million trays of kiwifruit, as well as better-run packhouses and coolstores.

The company has invested in large storage bins so it can protect and preserve kiwifruit quality when the weather turns bad.

Bilas says Satara has been able to minimise fruit losses to a much greater degree than others in the industry.

Packing and cool storage efficiencies are also behind a 6.6 per cent increase in the rebate for transactor shareholders (shareholders who supply the company) to 32c a tray of packed kiwifruit.

The slump in returns to investors was underlined by a poorer performance by the company's leased orchard division, with returns down a massive $1.70c a tray.

This was a major cause of the fall in the company's net after-tax profit from $1.3 million to $1 million.

The profit, while down on the previous year, still allowed the company to pay a six cents per share dividend, the same as in 2003.

Satara's listing means it has to cope with new regulatory requirements.

Bilas insists the company is equal to the task.

"It's important we perform well for both parts of the business."

Bilas says the significance of the just-paid 32c a tray rebate for growers should not be forgotten, given the $1 a share those growers must pay to become shareholders.

"We don't ask for the dollar up front.

"We simply make the calls out of the rebates that are paid in the future."

Other listed co-operatives have two classes of shares but Satara is the only one which allows investment shares to be held by anyone.

Since listing, it has 90 new shareholders.

One company, two shares

* Satara is a grower co-operative listed on the NZAX.

* It has two classes of shares: tradable investor shares, which can be held by anyone, and grower shares, which can be held only by co-operative members.

* It processes 13 per cent of the national kiwifruit crop and 10 per cent of the national avocado crop.

* The investor shares were listed in December at $1.30 a share but were trading at just $1.18 last week. Only several thousand shares change hands each week.

* 80 per cent of Satara's $26 million capital is provided by investors and 20 per cent by growers.

* This year's harvest, which started last week, is expected to garner 11.5 million trays of fruit, up from 11.2 million last year.