Seeka hikes interim dividend as first-half profit almost doubles

Seeka Kiwifruit Industries [NZX: SEK] hiked its interim dividend to shareholders as the first harvest from its recent Australian acquisition and record crops contributed to a first-half profit that almost doubled.

Net profit rose to $7.1 million, or 43c per share, in the six months ended June 30 from $3.7 million, or 24c, a year earlier, the Te Puke-based company said in a statement. Revenue climbed 39% to $134.2 million, and the board declared an interim dividend of 10c per share, payable on September 29 to shareholders on the register on September 22. That's up from 9c a share a year earlier.

The increased profit reflected "the successful completion of the avocado season, the commencement of harvest and selling of our Australian-grown produce and record kiwifruit volumes in New Zealand," Seeka said in commentary accompanying the result. "Higher New Zealand kiwifruit volumes have led to better earnings but required significant investment."

Seeka foreshadowed the result in June when it said it handled record kiwifruit volumes in the latest packing season and signalled the benefits from its purchase of Australia's Bunbartha Fruit Packers for $A22 million would start to show up. The shares climbed 6.2% to $4.78, having already gained 31% this year.

The company's Australian unit delivered $1.5 million of earnings before interest, tax, depreciation and amortisation on revenue of $13.3 million, while its New Zealand orchards delivered a 13% gain in ebitda to $5.1 million on a 15% increase in revenue to $37.7 million.

Seeka's post-harvest business, which coordinates the local harvest, packing, coolstore and logistics for its growers, lifted earnings 25% to $13.8 million on a 30% gain in revenue to $78 million. The retail services division posted flat ebitda of $500,000 on a 24% increase in sales to $5.1 million.

The company wrote down the value of its 32% stake in UPNZ, which imports plastic pockets and distributes them to the local kiwifruit industry, by $340,000 due to the discovery of grease deposits on several packs destined for China that prompted fruit marketing agency Zespri International to put a hold on fruit in that packaging until it was cleared of food safety issues.

Seeka supplied Zespri with 212,153 trays in those pockets, 12 of which were contaminated with the grease, and Zespri has lodged a claim against the grower "for all the costs of checking that product including all fruit loss, irrespective of cause," the company said.

The kiwifruit grower is disputing the claim but has taken a provision in its accounts, though didn't disclose the value, saying it was commercially sensitive while the dispute was in progress.

Seeka will provide annual earnings guidance at an update in October when it said it will have greater certainty over fruit quality, kiwifruit selling prices, the completion of Australian fruit sales, and any final resolution to a fire insurance claim.

(BusinessDesk)

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