ZESPRI’S latest profit projection to growers for the 2022-23 year contains some caution as the sector, like all primary industries, continues to grapple with shipping issues, freight costs and inflation in overseas markets.
In a letter to growers, Zespri chairman Bruce Cameron has signalled the marketer anticipates its after tax profit could be down by as much as 30% on last year’s record $361 million profit, with a range of $227m to $247m anticipated.
This is attributed partly to a reduction in licence revenue as the SunGold area offered for tender is scaled back to half its previous levels of 700ha.
Lower than expected volumes of crop off this year’s harvest have also been cited for slicing off some profit.
Initial estimates were for this year’s crop to total almost 200 million trays, but this is now estimated to be less than last year’s 177m trays.
But kiwifruit growers have been told to expect payments of $6-7.50 a tray for Green, still a favourable comparison to last season’s final payment of $6.35 a tray.
SunGold growers have been given a range of $10.25 to $11.75 a tray, compared to final payment last year of $11.51.
But growers will feel the reduction this season through a lower dividend payout, largely due to less licence area earnings being returned, with net dividend forecast at $1.10-$1.19 a share, compared to 2021-22’s $1.78 net per share.
Bruce Cameron told growers the ranges reflect the headwinds being experienced across the supply chain.
Zespri is also managing quality issues in market.
These have in part been driven by a labour shortage, with industry sources pointing to sub-par picking practices in some orchards causing fruit damage.
Zespri’s profit downgrade was followed hard on its heels by Seeka, the country’s largest kiwifruit grower and post-harvest processor, also predicting a slide in profit levels.
The company has advised NZX that with the harvest now completed it has experienced declines in fruit volumes matching those of the industry as a whole.
Seeka also suffered significant crop damage and losses in the Opotiki district late last spring that wiped out as much as half the Green crop in some growers’ orchards.
As a result, Seeka’s post-harvest volumes of 14.4m trays is a 21.5% reduction in average per hectare yields, with SunGold volumes of 26m trays a reduction in average per hectare yields of 10.5%.
Overall, Seeka is anticipating it will handle 42.4m trays for 2022,and while that’s ahead of its 2021 volumes it includes fruit from acquisitions made since then, including eastern BoP packing company OPAC.
The lower fruit volumes play straight to Seeka’s bottom line, with the company now expecting its full year net profit before tax to be in the $9-11m range, a significant slide from the December 31, 2021 profit before tax of $23.5m.
In the update Seeka chief executive Michael Franks said the outlook for future years’ production has increasing volumes, with previously grafted SunGold orchards coming into production and an expectation of a return to normal Green yields.
