Seeka Kiwifruit lifts annual profit 35% on increased volumes, insurance payout

Seeka Kiwifruit Industries [NZX: SEK], the largest kiwifruit grower in Australia and New Zealand, increased annual profit 35% as volumes recover from the impact of the Psa-V vine disease and it received insurance money from a fire at its largest packhouse facility.

Profit rose to $4.3 million, or 27c a share, in the 12 months ended December 31, from $3.2 million, or 22c, the year earlier, the Te Puke-based company said in a statement. That's ahead of its forecast of between $2.96 million and $3.53 million, which reflected uncertainty over insurance claims related to the fire. It received $5.46 million in insurance proceeds from the fire, although not all claims were finalised or accepted by the insurers at year end. Revenue rose 23% to $142.1 million.

Seeka is growing profits as its orchards recover from the vine-killing Psa-V disease, lifting its volumes in the past year to 27.8 million trays from 21.4 million trays the year earlier. It's expanding its Australian operations, with its purchase in August last year of the remaining half share in Pollen Australia and its acquisition of the orcharding and business assets of Bunbartha Fruit Packers.

"Seeka has significantly increased its profit and size during the year," chairman Fred Hutchings and chief executive Michael Franks said in the 2015 annual report. "The immediate outlook for growth remains positive as Seeka concentrates on expanding New Zealand facilities to handle higher kiwifruit volumes, completes the integration of Seeka Australia and improves orchard productivity in Australia."

The company said the benefits of its Australian expansion are expected to show in this year's result.

In New Zealand, the company provides orcharding, post-harvest and retail services to kiwifruit, avocado and kiwiberry industries, retail and ripening services for imported tropical produce, and operates a wholesale market.

Earnings before interest and tax at its post-harvest operations increased 37% to $8 million while ebit at the orchard operations slid 14% to $3.4 million and ebit at the retail service operations declined 5.6% to $1.6 million.

In Australia, following its acquisition last year of land, orchards and business assets, the company is now the largest single producer and supplier of Australian kiwifruit and nashi pears, a major supplier of European pears, with lesser production of other temperate-climate fruits.

Its Australian operations contributed $1.2 million of revenue and an ebit loss of $1.5 million last year. Had the acquisition occurred at the start of the 2015 year, contributed group revenue would have been about $14.8 million of revenue and estimated pre-tax profit $1.3 million, the company said.

Seeka's total debt increased to $53 million at December 31, from $17.2 million a year earlier as it financed infrastructure expansion in New Zealand to handle increasing kiwifruit volumes and the purchase of its Australian operations.

It invested $16.4 million in New Zealand additional fruit processing and storage facilities, up from $5.6 million the previous year, and said its New Zealand infrastructure will expand further in 2016 to ensure sufficient capacity to process fruit at its optimum time.

In Australia, it invested $20.2 million in acquisitions, with further payments of $A5 million due in 2016. Transaction costs and stamp duty cost it $1.1 million. The business was purchased on a 'crop off' basis, meaning the company spent $4.5 million growing the crops for harvest in 2016.

Seeka will pay a dividend of 10c a share on March 24, taking the total for 2015 to 19c, ahead of the 16c paid in 2014.

Its shares last traded at $3.80, and have gained 10% so far this year.

(BusinessDesk)