As hot, dry weather again casts a shadow over this year’s harvest, the impact of last year’s lowered yields were offset by an expansion in the company’s core business in both pack house and orchard assets.
That included buying the Aongatete packing company, strong gains on the sale of Northland orchards and significant lifts in the company’s retail services business.
Seeka has since completed further Northland property sales worth $10.1m, bringing the total Northland sales to $51.7m and delivering a gain of $6.1m.
Chief executive Michael Franks said the assets sales helped repay debt while the Aongatete buy secured core kiwifruit packing business assets.
Aongatete was bought for $25m a year ago, boosting Seeka’s processing capacity by 4.5m trays to take its annual capacity to 38m trays, more than 20% of the industry’s total production.
Consolidating operations remains firmly in Franks’ sights with the company investigating the sale of its $15m of orchard assets in Australia.
As recently as 2018 a retail investor presentation cited the Australian orchards as part of the company’s growth strategy but Franks said the decision to sell the orchards was not to quit but to exit ownership and lease them back.
The company has about 100ha of Green orchards in the Shepperton district of Victoria. He wouldn’t say how much they might fetch.
“But I can say Australians love Australian-grown kiwifruit and they grow very good fruit in those orchards.”
Back in New Zealand at Rangiuru near Te Puke the Oakside packing and coolstore was completed at a cost of $22m with another facility under way in Northland at Kerikeri.
The expansion and sales of assets have left Seeka in a mid-level debt position with bank debt of $116m compared to $80m at year end 2018 and $150m in June last year.
The company expects improved earnings for 2020, depending on crop volumes.
Franks said the Green crop is more likely than Gold to be affected by the dry weather after Christmas. Rain in Western Bay of Plenty has been sparse since Christmas with some prime growing areas recording no rain in January and 15mm for February.
Further increases in Seeka’s avocado business are also likely to boost growth, with an expansion of handling capacity in Northland as the region becomes a major avocado centre.
The board has declared a dividend of 12c a share comprising a normal dividend of 8c and a 4c a share from property sales.
Seeka’s shares were selling for $4.29 trading on Wednesday.
