Revamped Fonterra to be ‘more capital-efficient’
Fonterra chair Peter McBride says the divestment of Mainland Group is their last significant asset sale and signals the end of structural changes.
Zespri chair Peter McBride told over 350 grower-shareholders in Tauranga that Zespri had delivered $1.57 billion of sales in the 2014-15 season, up 16% despite a sluggish global economy.
“Total fruit and service payments for the season are up 17% to $939 million. Volumes of NZ kiwifruit sales are up 11% to 95.2 million trays this season, set to grow to over 130 million trays in the next five years,” says McBride.
“As well as these headline numbers, Zespri delivered excellent returns to growers and developed sales platforms for the increasing gold volumes in both new and existing markets.
“SunGold (Gold3) has performed very successfully on the orchard, throughout the supply chain and in the market and we are continuing to build awareness of this new product with consumers and customers through world class marketing – growing demand ahead of the large volume increases coming on,” he says.
Gold volumes are set to grow from 18.7 million trays in 2014-15 to around 30 million trays in 2015-16 to over 60 million trays by 2019-20. Volumes of non-NZ gold are also set to grow strongly to match the increase in NZ production and provide consistent year-round supply, forecast to grow from 2.5 million trays in 2014-15 to around 15 million trays in 2019-20.
McBride says Zespri’s net profit after tax has doubled from $17.2 million in 2013-14 to $34.6 million in 2014-15. This reflects an exceptional one-off factor of $19.6 million of unpaid revenue from new cultivar licences from previous years (before taxation and fair value adjustment), which were recognised due to greater certainty around SunGold’s performance in a Psa environment. Excluding this figure, Zespri’s normalised profit would have been $21.5 million – a figure that more accurately reflects current volumes and the strong investment being made in the growth to come.
Chief executive Lain Jager noted that foreign exchange continues to impact grower returns, reducing payments by $58.1 million in 2014-15. However, Zespri’s hedging policy offset the strength of the NZ dollar by $103.7 million compared to the spot rate.
“Orchard Gate Return per tray for Green was up to $6.01 and reached the highest-ever average per-hectare returns at $53,884, due largely to sales performance, increasing average yields and a shortage of Chilean kiwifruit in the market due to severe frosts in Chile. While Zespri is very positive about the outlook for delivering strong, sustainable returns to growers and shareholders, we note considerable headwinds weighing on future returns including the relative weakness of the Euro and Yen and recovery of Chilean volumes.
“We will continue to have seasonal ups and downs but, in the end, it is our relative rate of innovation compared to the competition which will define our future,” says Jager.
