Zespri holding firm in face of recession

Zespri chief executive Lain Jager

Kiwifruit export marketer Zespri expects grower returns from green kiwifruit to hold steady for the 2009/10 year while gold fruit returns would "continue their upward trend".

Grower-owned Zespri said today that indicative returns for green kiwifruit in 2009/10 were between $6.70 and $7.20 a tray, compared to an actual return for 2008/09 of $6.98.

For gold kiwifruit the indicative range was $11.20 to $11.70, compared to the actual figure for the previous year of $9.70. For green organic fruit the indicative range was $8.70 to $9.20, compared to the 2008/09 return of $9.27.

The indicative figures did not include a loyalty payment of 15c a tray, which Zespri said its board expected to pay.

Zespri chief executive Lain Jager said the usual growth in demand for green kiwifruit, the largest category in the company's portfolio, was not being seen, due to the global economic environment.

Demand was about the same as last year, while fruit markets generally had weaker pricing, he said.

Normally at this time of year sales of northern hemisphere kiwifruit had finished, but this year Italian fruit was still available in the European market and domestic fruit was on retail shelves in Japan.

Helping offset a reduction in pricing was a 53 per cent fall in oil prices and more favourable exchange rates, Mr Jager said.

For gold kiwifruit demand was growing and exceeded supply this season, meaning it had been possible to maintain pricing levels in local currencies.

Sales had started solidly in all markets but it was early in the season to be forecasting returns in a global environment characterised by significant volatility, he said.

The New Zealand dollar could also strengthen during the year, and could have an impact on returns.

Zespri today reported consolidated net profit of $23.9m for the year to the end of March. That was 21 per cent ahead of the previous year due to an increase in global kiwifruit sales.

Net global kiwifruit sales increased 25 per cent from $1.164 billion in 2007/08 to $1.451 billion in 2008/09. New Zealand-sourced kiwifruit volumes sold increased by 8 per cent to a record 100m trays, Zespri said.

"This increase was due to average orchard yields increasing by 6 per cent, along with improved size profiles and increased pricing."

Europe remained Zespri's largest market, with record sales of 60m trays of kiwifruit, Mr Jager said.

The emerging markets of China, South East Asia and North America showed the strongest year-on-year performances, growing from 10.8m trays to 13.7m trays. Those markets currently account for more than 14 per cent of the total New Zealand crop sold and remained important for the future growth of the business.

Chairman John Loughlin said Zespri had increased returns by 76c a tray on average in 2008/09, from the previous year.

Total fruit and service payments, excluding the loyalty premium, was $7.59 per tray supplied, an increase of 11 per cent on the previous year.

With oil prices at record highs during 2008, New Zealand-sourced freight costs increased by $26.9m. Exchange rate movements led to an increase of $52.8m in returns to growers.

Zespri said it intended to declare a final dividend for payment in August of 56c per fully paid share, taking the total dividend for the 2008/09 year to 98.41c per share, representing 100 per cent of available profits.

- NZPA