Friday, March 29, 2024

Aongatete boosts Seeka numbers

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Buying the Aongatete Coolstores business should give Seeka a total of nearly 36.6 million trays of kiwifruit this season. An impressive rise in the volume of SunGold fruit will also help the tally.
Seeka chief executive Michael Franks says the company’s category 1 emissions have fallen 4% since 2019.
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Seeka has paid $25m for the Katikati-based Aongatete orcharding and post-harvest business, in its own Bay of Plenty home-patch.

With those excellent assets and the new Northland infrastructure Seeka will have enough coolstore capacity for the next three seasons, chief executive Michael Franks said.

Before the Aongatete addition it already expected to pack more kiwifruit this year with a big rise in SunGold volumes making up for a reduced Hayward green pack-out.

Hayward is still the major variety by volume but the gap is narrowing.

From a Hayward total of 19.2m trays in 2018, Seeka expects to pack 18.2m trays this season from the pre-Aongatete business, Franks said.

For SunGold a lift to 13.5m trays from 10.8m last season is forecast.

Add in the smaller varieties and the total pack-out is expected to be 32.1m trays, up from 30.3m.

Then add an extra 4m to 4.5m trays from Aongatete, about half-and-half Hayward and Gold.

Franks said the dry late summer growing conditions had a positive impact on fruit quality but fruit size will be smaller than last season.

The Aongatete business will add between $3.5m and $4.5m to Seeka’s operating earnings (Ebitda) on a sustainable basis though it might take a year or so to net-out the full gains, Franks said.

This financial year to December 31 should have earnings of more than $40m all-up.

The company earlier amended its earnings forecast for the year to allow for the results of property sales and some accounting treatment changes. The Ebitda (pre-Aongatete) was expected to be in the $36.5m to $37.5m range, from $27.5m to $28.5m previously. The change to how leases are accounted for will add about $5.6m to earnings.

Seeka has made a gain of $4.2m on sales of Northland orchards since the December 31 balance date, subject to settlement. The orchard land was bought from T and G Global last year. More orchard land, which cost $14m, remains to be sold.

Franks said an increase in depreciation and interest costs will affect pre-tax profit. The effect of interest and depreciation costs will reverse over time.

The Aongatete acquisition pushes up Seeka’s borrowings but the group expects net bank debt to Ebitda to be within the policy range of 1.5 to 2.5 times Ebitda by the December 31 balance date. At the top end that would mean borrowings of about $100m based on the Ebitda forecast of just over $40m.

Seeka now has about $300m in total assets.

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