Zespri lifts forecast for 2018 tray returns

Zespri Group, the country's statutory kiwifruit exporter, raised its forecast for tray returns across all varieties in the 2018 financial year and is accelerating licensing for its SunGold fruit on growing demand for the sweeter variety.

The Mount Manganui-based company forecasts total fruit and service payment to be $1.39 billion in the year ending March 31, up from a previous forecast of $1.34 billion, with the board signing off on higher returns to growers, it said in a statement. Zespri paid $1.39 billion to growers in 2017 due to a steep increase in supply.

The forecast for net profit was trimmed to a range of $96 million and $101 million from an earlier projection of $98 million and $103 million. It also expects to pay a dividend of 69-to-73 cents per share.

"Forecast returns have increased for all pools and Zespri is targeting a strong, clean finish to the New Zealand season," chair Peter McBride said in a letter to growers.

Zespri expects to pay $6.23 a tray for the green variety and $8.24 for organic green, up from an August forecast of $5.84 and $7.92 respectively, and $9.73 and $5.39 for gold and Green14 varieties, compared to an earlier projection of $9.28 and $5.25 respectively.

The company outlined optimism for the 2018 season on improving returns for green kiwifruit crops and the expansion of the SunGold variety.

Zespri has licensed 3,720 hectares for SunGold production in Europe, and said the long-term outlook needs supply to accelerate.

"The gap to fill between the strong demand outlook and our current trajectory of supply growth presents a significant strategic opportunity," McBride said.

The kiwifruit marketer will allocate 700 hectares of SunGold licence in 2018 through a closed tender and plans to extend the release of licences out to 2022 which would see 3,500 hectares released over the next five years. That's subject to an annual review to weigh up any new risks that emerge.

The board also signed off on an extra 50 hectares of Organic SunGold licence being released.

(BusinessDesk)