Strait of Hormuz Closure Threatens NZ Beef and Lamb Trade
The current Middle East war could not have happened at a worse time for New Zealand.
For six months ending June 30, 2024, T&G Global reported an operating loss of $2.6 million, compared to $11.6m for the same period last year. Net loss before tax was $8.2m compared to $21.4m last year. However, total revenue for the Group increased 7% to $820m, compared to $765m in the prior year.
Chief executive officer Gareth Edgecombe says that over the last five years, significant investment has gone in to building the foundations form its future growth.
“In the first half of the year, we’ve seen the benefits of this as we navigated and adjusted to the economic conditions and made progress executing our strategy. It has however been a slower than expected start to the year.
“This season’s apples are high quality, with great flavour and storability, however the lingering impact of Cyclone Gabrielle has reduced this season’s Hawke’s Bay apple volumes. While this is commensurate with the industry-wide experience, it has impacted our financial results. We have also experienced weak fruit and vegetable pricing in the domestic market due to plentiful supply combined with subdued consumer sentiment.”
Notwithstanding this, T&G’s Apples business increased its revenue 14% to $589 million, compared to $518 million in 2023.
“Our Apples strategy is focused on growing great brands and winning in key global markets and we’ve invested significantly in the building blocks for our growth. In the last six months, it’s been great to see the maturing of our Apples strategy,” says Edgecombe.
“It’s the first full season for our new, highly automated Whakatu packhouse and it’s operating at planned efficiency levels – and continuing to improve. In the coming years we expect it to be a strong contributor to profitability as apple volumes increase. Likewise, our appointment of Kotahi to procure ocean freight has enabled us to realise savings and logistical efficiencies.
“To meet growing global consumer demand for our premium apples, we operate a dual hemisphere, multi-country growing strategy, and our 2023/24 North American ENVY™ apple crop was high quality. The brand is holding up exceptionally well in the challenging United States domestic market, with it outperforming other premium brands in both pricing and sales. In Asia, the crop experienced strong sales, and we expect this momentum to continue now that we’ve transitioned across to Aotearoa New Zealand-grown apples.”
Revenue in T&G’s Australasian business, T&G Fresh, decreased to $218 million, compared to $232 million in 2023. This was largely due to it being a difficult trading period in New Zealand with low demand and soft prices, and whitefly impacting tomato volumes.
“While the local market was challenging, given weak consumer sentiment coupled with plentiful supply, our Fijian and Pacific Islands business continued to trade well.
“In Australia, initial production is coming online at our 20ha Queensland berry farm, which is planted with unique blueberry varieties licensed by our VentureFruit business. These berries are outstanding performers in terms of their size, flavour, colour and shelf life. While it’s early in the season, signs are positive for a high yield and strong prices.
“We’ve also made excellent progress with our expansion of the farm, where we’re planting an additional 20 hectares of berries. We expect this to be completed by year end.”
T&G’s VentureFruit business saw its revenue decrease to $4 million, compared to $5.3 million in the comparable period. While licensing revenue was reduced given the macro-economic environment, new licensed plantings in Aotearoa New Zealand, the United States and China demonstrate continued strong demand for T&G’s premium ENVY and JOLI apples.
“Looking out to the remainder of the year, it’s encouraging to see early signs of easing inflation, which will not only benefit our business, but also many households,” says Edgecombe.
He says that last year’s cyclone and this year’s reduced apple volumes have highlighted the need to continue to develop resilience across the business to ensure they’re in a strong position, regardless of what comes their way.
“Our team have responded strongly to this. We’re firmly focused on delivering our strategy and looking for opportunities to reduce costs, drive efficiences and grow revenue, to ensure we meet our medium-term strategic and financial objectives.”
