Zespri lowers fruit returns forecast, downgrades FY23 corporate profit outlook

Zespri's global net kiwifruit sales topped $4 billion last financial year. Photo / File

Higher-than-estimated kiwifruit quality issue costs and ongoing challenges have squeezed some of the juice out of global marketer Zespri’s earnings and profit forecasts for this season.

Chairman Bruce Cameron has told the company’s 2800 New Zealand growers in a forecast update that tray returns for the best-seller SunGold kiwifruit and its organic counterpart are now below the June orchard gate return guidance.

The forecast range of corporate net profit after tax for the financial year ending March 31 was now $225 million to $235m, including grower licence income.

Corporate profit after tax in 2021-2022 was $361.5m.

The bottom end of the new profit forecast range was slightly below the bottom end of the August 2022 forecast range, Cameron said.

The new forecast for SunGold returns per tray in 2022-2023 is $9.81, compared to the August forecast of $10.02. The November forecast for SunGold per hectare is $135,377 compared to $138,495 predicted in August. Organic SunGold is forecast to return $11.42 per tray compared to $12.18 forecast in August.

Zespri green fruit returns show signs of holding their own against quality impacts by maintaining returns forecast in August. A tray of green fruit is forecast to return $6.13, while the per hectare outlook for this variety is $61,304, a slight improvement on the August forecast of $61,144.

The recently commercialised red variety Zespri RubyRed is now forecast to return $20.38 per tray, up on the August forecast of $18.93, and $38,501 per hectare.

Cameron said the latest forecasts reflected the ongoing challenges of this season, particularly with fruit quality.

Weekly rates of onshore fruit loss had trended above those considered in the August forecast, and there was higher onshore fruit loss this season across the four largest fruit pools.

“Offshore, market teams have continued to identify opportunities to lift returns and we have seen positive movements on freight costs and foreign exchange. Offshore quality costs have however continued to track higher than previously estimated, most notably across gold (fruit) pools.”

All Zespri’s major markets had updated their estimates of the season results with projections of higher fruit loss and quality claims, with Europe, China and Japan receiving the largest cost impact, Cameron said.

Aside from SunGold, forecast average per hectare returns remained within the June 2022 range guidance.

The total fruit and service payment, across all fruit pools and excluding the loyalty premium payment, was forecast to be between $2.2 billion and $2.225b once revised market fruit allocations were known following updates to expectations around onshore fruit loss.

Cameron said Zespri, like its growers and supply chain partners, was experiencing headwinds “and going into a very tough economic cycle due to the challenges of reduced 2023 New Zealand supply and an anticipated global recession”.

The company has scheduled additional roadshow meetings to discuss the details of the new returns forecasts, and to update growers on the industry’s quality action plan for 2023.