Zespri 2016/17 grower returns sag despite big jumps in volume and turnover

New Zealand's statutory kiwifruit exporter, Zespri, achieved distributable profit for its grower shareholders of $34.8 million in the year to March 31 on a 19 percent increase in turnover of $2.26 billion.

The Tauranga-based business signalled a result roughly three times stronger than is expected in the current financial year, with prospects for an extra interim dividend being paid to growers in August, despite the outlook for total fruit volumes being lower for the season ahead.

The company focused its public statement on achieving a record net profit after tax of $73.7 million for the year to March 31, up 106 percent from the previous year's $35.8 million result, but the increase was "mainly due to revenue from the tender for licence for Zespri's proprietary variety SunGold last year," chairman Peter McBride said.

Total volumes of New Zealand-grown fruit rose 18 percent to 137.7 million trays, compared to the previous year, while offshore production by Zespri-licenced growers rose 14 percent to 16.6 million trays.

Payments to New Zealand growers per tray supplied fell 1 percent to $9.46, although total payments were up 21 percent at $1.39 billion because of the steep increase in total supply.

Zespri has a statutory monopoly over the export of kiwifruit to all export markets other than Australia and faces competition in the New Zealand domestic market.

Its shares trade on the Unlisted platform and are not subject to NZX continuous disclosure rules. It will not release full financial accounts until July.

Its press statement yesterday announced the intention to pay a 17 cents per share fully imputed final dividend, taking dividends for the year to 25 cents a share, an increase from 84 percent of distributable income to 87 percent between the two seasons.

Distributable profit is a measure "based on NPAT but also incorporates adjustments for non-cash items and prior year figures," a company spokesman said, and is forecast to roughly triple in the current financial year to between $101 million and $106 million.

"An interim dividend is normally paid in December and the board will consider making an additional interim dividend payment in August 2017," said McBride.

Figures in the press statement and released to BusinessDesk on request show total New Zealand and offshore production of gold kiwifruit rose 48.2 percent to 53.2 million trays, 47.9 million of which were grown in New Zealand. Returns per tray of New Zealand-grown gold fruit rose 39 percent to $98,838 per hectare, whereas the value of a hectare of the green variety fell 6 percent to $53,555. Organic green fruit returns rose 3 percent to $54,427 per hectare.

However, it was still the third season in a row in which green fruit had cleared more than $50,000 per hectare, assisted by record average yields of green fruit at 12,281 trays per hectare, the company said. Yields had been affected by "a sharp increase in green volume and a late start to the season due to delayed maturity," said McBride.

Per tray return on green fruit fell to $4.36 from $5.13 in the previous season.

Zespri intends auctioning licences for some 1,800 hectares of the premium gold variety plantings offshore over the next three years. That will help to meet year-round export market demand by doubling the supply of the gold fruit grown outside New Zealand.

Looking to the 2017/18 season, now under way, outgoing chief executive Lain Jager said volumes were likely to be lower but would still be the second-highest on record.

Gold fruit would increase to around 55 million trays "but seasonal factors will see green volumes fall back to around 69 million trays supplied, versus 83 million trays sold last year".

(BusinessDesk)