Seeka lifts 2016 guidance following insurance settlement

Seeka, the largest kiwifruit grower in New Zealand and Australia, says it has settled a second insurance claim from a 2015 fire, and has updated its earnings guidance to reflect the "extraordinary gain."

The company will get about $3.6 million plus GST in the insurance settlement for "losses associated with the mitigation efforts" after a fire which destroyed a shed at its Oakside post-harvest site in Tauranga in March 2015. The blaze significantly affected a coolstore containing about 250,000 trays, the company said at the time.

Seeka has already received $5.5 million in insurance proceeds, though not all claims were finalised or accepted by the insurers at year end 2016. The fire at its Oakside site had unexpectedly impacted fruit storage, and fruit losses were higher than previously forecast, meaning the company initiated a separate claim, it told shareholders last October.

Net profit guidance has been lifted to between $9.5-10.6 million, from between $7-8 million, with earnings per share forecast to be between 59 cents and 66 cents, from between 44-50 cents which it predicted in October. Seeka posted a $4.3 million profit in 2015 and earnings per share of 29 cents.

"The settlement less a small amount of costs and tax will form an extraordinary gain in 2016 financial year, with the financial cost of the event being recorded in Seeka's accounts in 2015 financial year," it said in a statement to the NZX.

Seeka listed in 2003. In recent years it has added SeekaFresh, which handles non-Zespri International supplied produce including avocados, and Glassfields, which imports and ripens tropical fruit and provides a logistics service for retailers. It produces avocado oil that is sold under the Village Press brand.

The company invested $16.4 million in New Zealand additional fruit processing and storage facilities in 2015, and a further $24.8 million in the first half of this year, with $13.4 million spent on New Zealand coolstores and packing infrastructure, it said. In 2017, it has plans for new coolstores, pre-coolers and other equipment.

The shares last traded at $4.50 and have surged 31% this year.

(BusinessDesk)