Zespri’s final result for 2014/15 shows an industry that is back on track and revitalized for the strong growth outlook ahead. The last season has been extraordinary, Zespri Chairman Peter McBride said, with the total fruit and service payment up 17 percent on the previous year to $939 million. Zespri’s global kiwifruit sales reached $1.568 billion, up 16 percent on 2013/14. Export earnings increased by 18 percent to $1.086 billion versus the 2013/14 season. “These strong headline results were achieved because of the effort of growers, the post-harvest sector and the Zespri team onshore and in the markets,” Mr McBride said.
Zespri sold 69 million trays of Zespri Green Kiwifruit from New Zealand at the highest-ever average per hectare return for the industry of $53,884 and a very strong average per tray return of $6.01.
Gold returns fell to $73,890 per hectare and $9.80 per tray, owing in part to the remarkable rebound in Gold kiwifruit production, led by Gold3. Total Gold supply increased from 11.1 million trays in 2013/14 to 18.6 million trays in 2014/15. The lower per hectare return also reflects the fact that average industry Gold3 yields are below potential at this stage, following the recovery from Psa. Average yields will increase strongly as developing canopies come into full production in the next few years.
On the supply side, there are still a number of orchards and growers affected by Psa, but the industry is focused on proactively managing the risk. The volume of New Zealand-grown kiwifruit sales increased 11 percent to 95.2 million trays, with Gold3 continuing to provide a robust recovery pathway for the industry. Gold3 is on track to reach over 60 million trays of supply by 2019/20 as new plantings and new grafts come into production.
Commenting on the record returns for Green Kiwifruit, Mr McBride highlighted two factors. “Our result was helped by sales performance and by productivity increases, with average yields now at nearly 9,000 trays per hectare.” The shortage of Chilean kiwifruit in the market, following severe frosts in Chile, also contributed to the strong Green returns.
Demand for Zespri Organic Green Kiwifruit remained steady in 2014/15, with sales of 3.5 million trays and a return of $43,996 per hectare. Green14 was well-received by customers and Zespri continues to work to understand the positioning of this product. The average orchard gate return per hectare of $29,682 reflects that productive hectares are not year at full commercial production levels.
Supply of non-New Zealand kiwifruit increased from 11.2 million trays to 13.3 million trays. There was a notable increased in volumes sold into both Europe and China of Green Kiwifruit, with most production sourced from Italy. Zespri Global Supply delivered a profit before tax of $8.99 million.
Zespri Chief Executive Lain Jager said that the company will remain focused on delivering strong, sustainable returns to growers and shareholders, but also pointed out some headwinds weighing on performance. “The strong New Zealand dollar reduced New Zealand grower returns by $58.1 million in the 2014/15 season compared to the 2013/14 season, however our hedging policy for the New Zealand grower pools offset the strength of the New Zealand dollar by $103.7 million compared to the spot rate.”
Looking ahead, foreign exchange, the recovery in supply of kiwifruit from Chile and Gold3’s rapid volume growth will put pressure on per tray returns. Zespri’s May forecast for the 2015/16 season sets out a returns range of $5.00 to $5.50 per tray for Green Kiwifruit and $6.70 to $7.20 per tray for Gold Kiwifruit.
In terms of the long-term strategy, Mr Jager said that Zespri is committed to preserving and building its position as the category leader, delivering high-quality product through a premium, branded strategy. “We will focus on consistently delivering the premium quality and taste that Zespri Kiwifruit is known for, growing productivity, developing our supply chain and service offering, and leading the category in our commitment to food safety and sustainability.”
Zespri’s net profit after tax for the year is $34.6 million, however this reflects an exceptional one-off factor which is the inclusion of Gold license revenue that had been deferred from prior seasons.
The normalised profit after tax, which excludes the $13.1 million that relates to licence income, was $21.5 million.
The Board has announced an intention to declare a final dividend of 7 cents per share to take full-year dividends paid to 12 cents per share. This is up from 11 cents per share in 2013/14.