Saturday, March 30, 2024

Expansion boosts sales, profits

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Continuing sales of Northland kiwifruit orchards and income from sales of Australia orchards will reduce Seeka’s debts to more conservative levels, the directors say.
Seeka chief executive Michael Franks says the company’s category 1 emissions have fallen 4% since 2019.
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The company has borrowed significant sums for business acquisitions and development of its kiwifruit post-harvest infrastructure.

That did not stop Seeka increasing profits in the latest half-year to June 30, though the increase in revenue, up 17% to nearly $170 million, was greater than the 8.6% lift in operating earnings (Ebitda) to $27.9m. 

The after-tax profit growth was much better, up 27% to $11.8m from $9.3m. 

Interest expenses were covered more than eight times by earnings before interest and tax (Ebit) of $20.3m and operating cashflow rose to $5.14m from $2.49m a year earlier.

At balance date Seeka had borrowings of $150.4m, an increase of $32m on a year earlier, financing total assets of $407.4m, a ratio of 37%. Total assets are up from $311m.

Seeka bought major kiwifruit assets in Northland and has since sold about $19m worth of orchards for sale gains of $3.8m and has another $21.6m worth of orchards to sell, expected to happen over the balance of the financial year. Seeka is keeping management contracts on the orchards with fruit to be packed at its new Kerikeri pack house.

It also bought the Aongatete kiwifruit business in Bay of Plenty and has expanded and upgraded the Oakside pack house and cool store.

When Kerikeri is completed the company will have post-harvest capacity to handle fruit supply for the next two seasons, chief executive Michael Franks said.

Seeka’s kiwifruit and nashi business in Victoria, Australia, lost $150,000 during the year, compared to $2.7m in Ebitda a year earlier. 

Very dry conditions affected fruit size, Franks said. 

Kiwifruit was profitable but the nashi operations lost money.

Australia is important to the group and orchard development will continue. Kiwifruit orchards will be sold and leased back, with gains used to reduce debt.

In NZ Seeka also operates in avocado and kiwiberry but kiwifruit is by far the biggest part of the business.

In the latest year $29.8m of Ebitda, excluding overheads, was provided by the post-harvest division, $4.2m from the group’s mainly-leased orchards and $800,000 from the retail services.

The post-harvest group packed 33.5m trays, up from 31.1m a year earlier. Seeka’s traditional business packed 29.6m trays, down 5% due to a seasonal drop in Hayward variety yields, plus 3.9m trays from Aongatete.

Franks expects lower operating earnings in the second half of the year, reflecting a lower volume of fruit in store at June 30 and the earlier selling season.

Operating earnings guidance for the full-year is between $32.5m and $33.5m, compared with a restated $31m in Ebitda last year.

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