Seeka reports full-year net loss and revenue fall as bad 2023 weather takes toll

Seeka is now focused on restoring profitability and reducing debt after a tough FY23.

One of the country’s biggest kiwifruit growers, NZX-listed Seeka, has testified to horticulture’s grim weather-battered 2023 year with a full-year net loss of $14.5 million.

This was on the back of a $47m fall in revenue to $301m from $348m for the year ended December 31, 2023. Net profit in FY22 was 6.5m.

A loss before tax of $21m was in line with the announced guidance of $20m to $25m. Ebitda (earnings before interest, tax, depreciation and amortisation) was $26m, down 44 per cent on FY22′s $46.1m.

Chief executive Michael Franks said the 2023 harvest was difficult across the horticulture sector with a warm, wet winter and extreme weather events including cyclones affecting orchards in New Zealand and Australia.

“Yields were down across the industry with Seeka only handling 30 million trays of class 1 New Zealand kiwifruit in 2023, compared with 42 million in 2022,” Franks said.

Seeka was now focused on restoring profitability in FY24 and reducing debt, with the La Nina weather system impacting the last two seasons now over.

Orchards were now benefiting from much improved growing conditions, with kiwifruit vines holding high levels of fruit. The industry’s forecast of record volumes would allow Seeka to realise the full efficiencies of its highly-automated post-harvest facilities, Franks said.

The 2024 season kiwiberry harvest and sales were nearing completion and the first RubyRed kiwifruit crops were being packed.

Seeka had the capacity, systems and staff to handle the much higher volumes, he said.

“While 2023 volumes were materially down, Seeka’s operational performance between the orchard and point of sale was excellent. More than 99 per cent of the kiwifruit we packed for our growers was delivered on time and in spec to the marketer Zespri, and the quality of our fruit supplied to the international consumer was the best in the industry.

“The large drop in kiwifruit volumes, however, reduced Seeka’s revenue for the year to $301 million, down from $348m in 2022. This contributed to a full-year loss of $14.5m after tax in 2023, compared to a $6.5m net profit in 2022.

“Seeka responded to the seasonal downturn by suspending dividends and reducing overheads. This included establishing a captive insurance structure to slow the impact of rising insurance costs. Having completed a number of post-harvest automation projects, Seeka also reduced its capital expenditure.

“In June our bankers provided a new $201m sustainability-linked loan facility that included covenant waivers that allow Seeka to focus on restoring profitability”, Franks said.

Seeka’s total assets remained stable at $549m, with $388m invested in property, plant and equipment.

After a sustained period of investments, Seeka had a post-harvest infrastructure capable of handling more than 50 million trays of kiwifruit, which is forecast to handle short-term growth from its supplying growers efficiently, Franks said.

“Seeka is focused on restoring profitability in 2024 and reducing debt, while maintaining the excellent operational performance achieved in 2023 for its growers and customers. Having invested in capacity and automation, Seeka is containing capital spend to maintenance, risk reduction, and automation.”

Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the dairy industry, agribusiness, exporting and the logistics sector and supply chains.