Seeka first-half profit climbs 56% on improving Australian operations

Seeka lifted first-half profit 56% as the biggest kiwifruit grower in Australasia enjoyed wider margins across the Tasman, but it still expects a smaller crop will see a decline in annual earnings.

Net profit climbed to $11.1 million, or 64c a share, in the six months ended June 30, from $7.1 million, or 43c, a year earlier, the Te Puke-based company said in a statement. That was despite largely flat revenue of $134 million, and bolstered by gains from the company's Australian fruit division. Still, Seeka anticipates a smaller New Zealand kiwifruit crop this year, with volumes down 21% in the first half, and affirmed annual guidance for a 15% drop in operating profit to $6.6 million in calendar 2017.

"Profits are up in the first six months, reflecting a strong lift in earnings in Australia and a lift in earnings from Seeka's avocado business and seasonal timing differences," chief executive Michael Franks said. "Seeka is anticipating lower operational earnings for the full financial year in 2017, reflecting a significantly lower Hayward (green) kiwifruit crop across New Zealand."

Seeka's interim report comes a day after Zespri's annual meeting in Mt Maunganui, where the kiwifruit marketer's management told grower shareholders it was working to increase returns on green varieties, squeeze more gains from the SunGold variety and develop the organic category. Zespri is also working on bringing new varieties to market.

The fruit grower today said it's still investing in fruit handling infrastructure to cope with extra SunGold volumes and an anticipated improvement in Hayward yields, and will keep expanding the Australian business, which it sees as "an important investment in diversity" as plantings mature over the coming three years.

Seeka built up its Australian division with a 2015 acquisition of Bunbartha Fruit Packers for $A22 million. The unit generated earnings before interest, tax, depreciation and amortisation of $3.4 million in first six months of calendar 2017 on revenue of $11.8 million, compared to year earlier ebitda of $1.52 million on sales of $13.3 million.

Post-harvest operations remained the company's core division, with a 24% gain in ebitda to $17.1 million on a 4.6% decline in revenue to $74.4 million, while orchard earnings increased 5.2% to $5.8 million as sales slipped 2.3% to $36.8 million. Seeka's retail service unit, which includes last year's acquisition of the Kiwi Crush and Kiwi Crushies product ranges, more than doubled earnings to $1.3 million on a 114% jump in revenue to $10.9 million.

The board declared an interim dividend of 10c per share, payable on September 22 with a record date of September 15.

The shares were unchanged at $5.11 and have gained 11% this year.

(BusinessDesk)