A remarkable season of increased yields and the largest-ever New Zealand crop helped lift total Zespri sales volume from New Zealand to a record 137.7 million trays, 18 percent up on the previous year. Sales of kiwifruit from Zespri’s Northern Hemisphere supplying locations also grew by 14 percent to 16.6 million trays, driven mainly by SunGold vines coming into production in Italy.
Zespri Chairman Peter McBride says Zespri sold more fruit faster than ever before during the 2016/17 season, with global fruit sales revenue rising by 19 percent to $2.26 billion.
“Volume growth and continued strong investment by Zespri into marketing and market development helped to lift returns overall with the average return per hectare for New Zealand growers reaching $68,868.”
The 2016/17 season also saw the announcement of 1,800 hectares of SunGold licence allocated for Europe over the next three years, doubling Zespri’s offshore production of the variety to meet growing demand for 12 month supply.
Corporate result: record profit driven by demand for SunGold licence
Zespri’s net profit after tax more than doubled from $35.8 million to $73.7 million, mainly due to revenue from the tender for licence for Zespri’s proprietary variety SunGold last year. “There was strong industry participation in the release of 400 hectares of SunGold licence in New Zealand last year, reflecting the continued grower confidence in global demand for gold kiwifruit,” says Mr McBride.
Revenue from the New Zealand SunGold licence release is a significant driver of Zespri’s corporate income. A further 400-hectare tranche was released through a tender to New Zealand growers this year and the Zespri Board will decide on a potential three additional tranches of 400 hectares each year up to 2020, subject to an annual review of performance after each selling season.
The Zespri Board approved the intention to declare a 2017 final fully-imputed dividend of 17 cents per share, payable in August. This brings the total dividend to 25 cents a share.
Zespri’s distributable profit range for the 2017/18 financial year is expected to be $101 million to $106 million, based on the forecast net profit after tax range announced in April. Zespri expects to distribute dividends within the range of 80 to 90 percent, subject to meeting all financial obligations including solvency before and after distribution. An interim dividend is normally paid in December and the Board will consider making an additional interim dividend in August 2017.
Green yields support returns, SunGold results outstanding
Mr McBride notes the season was challenging in several respects. “A sharp increase in Green volume and a late start to the season due to delayed maturity put pressure on pricing but record average yields of 12,281 trays per hectare meant the industry could achieve per-hectare returns of $53,555. This is the third season in a row that Zespri has delivered average Green returns of over $50,000 a hectare.” The Green return per tray was $4.36, down from $5.13 per tray in 2015/16.
Mr McBride explains SunGold delivered an outstanding result. “Zespri achieved an average per-tray return for the Gold pool of $8.64 – up from $8.21 in 2015 – despite supply increasing to 48.5 million trays from 32.6 million trays in 2015/16. Average per-hectare returns increased by 39 percent to $98,838. The customer and consumer response to SunGold continues to be very positive, supporting our confidence in market demand.”
The average per-hectare return of $54,427 (2015/16: $52,917) for Organic Green is a record result for the category, supported by strong yields, although the return on a per tray basis fell to $6.86 per tray (2015/16: $7.18). The return per tray for Green14 (Sweet Green) was $5.79 (2015/16: $7.01) but the average per-hectare return increased to $45,853, driven by higher average yields as orchards came into full production.
“We can be satisfied overall with performance in the season, with a good result delivered despite the challenges of a sharp increase in supply and a relatively late harvest,” Mr McBride concludes. “The task ahead is to continue to deliver long-term value for growers and shareholders through consistent and disciplined implementation of our strategy.”
Looking to the 2017/18 season
Zespri Chief Executive Lain Jager notes the volume outlook for 2017/18 is slightly down on last season but still the second-largest crop in the company’s history.
“Supplied SunGold volumes will increase to around 55 million trays but seasonal factors will see Green volumes fall back to around 69 million trays supplied, versus 83 million trays sold last year. Our sales and marketing teams are launching programmes in 59 countries and working hard to maximise value to growers and shareholders through great campaigns and promotions in support of our premium kiwifruit,” says Mr Jager.
About Zespri Group Ltd
With sales revenues of $2.26 billion in 2016/17, Zespri is one of the world’s most successful horticulture marketing companies and the Zespri brand is recognised as the world leader in premium quality kiwifruit. Based in Mount Maunganui, New Zealand, we are 100 percent owned by current or past kiwifruit growers, and employ around 400 people in New Zealand, Asia, Europe and the Americas.
On behalf of our 2,500 growers in New Zealand and 1,200 growers based elsewhere, Zespri manages kiwifruit innovation and supply management, distribution management and marketing of Zespri Green, Zespri SunGold, Zespri Organic, Zespri Gold and Zespri Sweet Green Kiwifruit.