Seeka doubles first half profit on Opac sale gains; kiwifruit industry still challenging
Seeka Kiwifruit Industries [NZX: SEK], the fruit grower and coolstore and packhouse operator, more than doubled first-half profit as challenging trading conditions and rising costs were offset by gains from the sale of its cornerstone stake in Opotiki Packing and Cool Storage.
Profit rose to $1.48 million in the six months ended June 30, from $672,000 a year earlier, the Te Puke-based company said in a statement. Sales rose 18 percent to $79.2 million, while cost of sales increased 21 percent to $69.3 million. Earnings before interest, tax, depreciation and amortisation rose 29 percent to $5.8 million, and include $1.4 million from the sale of the Opac shares.
"The post-harvest environment remains competitive," Seeka said in a statement. "The margins are tight as post-harvest companies drop prices to attract custom. While capacity overall is expanding to handle greater volumes of fruit, a competitive environment is expected to continue."
Local kiwifruit growers have been struggling with the outbreak of Pseudomonas syringae PV actinidiae in 2010, which infected about 40 percent of the nation's orchards, with gold fruit varieties hardest hit. The sale of its 20 percent stake in Opac for $3.1 million was part of Seeka's post-Psa strategy, which has included selling off non-core assets, reducing debt, restructuring operations and limiting capital spending. As part of its restructure and diversification away from kiwifruit, Seeka bought Glassfields (NZ), the fruit ripening and import business, for $5.25 million in April.
In the six month period kiwifruit volumes packed rose to 20.2 million trays from 18.8 million a year earlier. Market share for Hayward, the green kiwifruit variety, grew to 15 percent, but the Zespri SunGold variety slipped to 11 percent, as the recovery in gold fruit variety is yet to reach commercial volumes, Seeka said. The fruit grower expects the gold market to double in 2015, once re-grafted SunGold orchards reach commercial volume.
Shares of the NZX-listed company were unchanged at a near-five year high $3.29, and have gained some 57 percent since the start of the year.