Zespri still advances despite high kiwi

Craig Greenlees says trading conditions have been difficult. Picture / Wanganui Chronicle

Kiwifruit exporter Zespri has overcome the high New Zealand dollar to boost profits and return a much-needed dividend to its growers.

The Tauranga-based co-operative cracked $1 billion in revenue for the first time in the year to March 31, 2005, and yesterday reported a net profit of $26.5 million - up 16 per cent on the year before.

The growth was driven by a 12 per cent increase in global sales.

Zespri chairman Craig Greenlees said it was a creditable result in a year when the group had been faced with higher-than-normal volumes, variable fruit quality and a high dollar.

He said the conditions had provided the toughest ever test of the company's integrated "orchard-to-retail" system.

Payments to growers - on a per tray basis - were down on the year before, largely due to currency costs.

Per hectare returns, including a loyalty payment, fell by between 10 and 15 per cent depending on the variety of fruit produced.

Zespri sells Green, Gold and Green Organic varieties.

But growers can take comfort in the 50c dividend, which has been maintained despite the tough conditions. That represents a dividend yield of 12 per cent in Zespri shares.

Greenlees said new business units Zespri Fresh Produce and Aragorn improved their performance, reporting modest operating surpluses for the year.

Zespri Fresh Produce manages the procurement of non-New Zealand kiwifruit and planting of Zespri Gold vines by working with Northern Hemisphere partners.

Aragorn is the Hawkes Bay-based processing business. It is focused on developing kiwifruit as an ingredient for juices, icecreams and yoghurts.

Green fruit has traditionally been considered too tart for processing purposes but the Gold fruit is sweeter and has more potential.

Because it is sold as premium product, a large volume of Gold kiwifruit does not make the grade for export. By developing alternative uses for reject fruit, Zespri hopes to add extra value for growers.

Greenlees said another tough year was expected.

"We've had a slower-than-desirable start, increased freight costs and a dollar that is strong against all our trading partners."

In April, Zespri chief executive Tim Goodacre said foreign exchange costs would cut $52 million off Zespri's bottomline before the season even started.

He said rising freight charges would to add another $5 million in costs. Offsetting those factors, initial sales into Asia had been strong with local currency prices in some markets up on last year.

The European sales programme gets under way this week.

Zespri's equity at balance date was $77 million, up from $53.9 million at March 31, 2004, which included $12.6 million in proceeds from its share offer.

The issue of 4.2 million shares to growers wanting extra shares to achieve a closer alignment of company shareholding and production was 83 per cent subscribed.
Zespri

* Sales up 12 per cent.
* Volumes shipped up 25 per cent.
* Record sales volumes to Europe, Japan and Asia.