Seeka offers kiwifruit growers share incentive in exchange for trays

Seeka Kiwifruit Industries chief executive Michael Franks
Seeka Kiwifruit Industries 12-month price history (NZX.com)

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Seeka Kiwifruit Industries [NZX: SEK], the fruit grower and coolstore and packhouse operator, is looking to secure kiwifruit supply over the next three years by offering growers shares in return for exclusive supply from their orchards.

Under the growers incentive scheme eligible growers will be issued new shares annually in proportion to the number of trays provided, at a rate of 10 cents worth of shares to every tray, until 2016, the Te Puke-based company said in statement. Seeka shares were unchanged near a five-year high at $3.29 on the NZX and have gained 57 percent this year.

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. Seeka expects the gold market to double in 2015 once re-grafted SunGold orchards reach commercial volume.

In the first six months of 2014, Seeka's kiwifruit volumes packed rose to 20.2 million trays from 18.8 million a year earlier, while first-half profit rose to $1.48 million, from $672,000 a year earlier on an 18 percent lift in sales to $79.2 million. 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 post-harvest environment remains competitive," Seeka said when it reported first-half results. "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."

Seeka is now implementing post-Psa strategies, which have included selling non-core assets, including a 20 percent stake in Opotiki Packing and Cool Storage for $3.1 million, and divsification, such as buying Glassfields (NZ), the fruit ripening and import business, for $5.25 million in April.

Eligible growers have until the end of the month to join the scheme, with the first round of new shares for the 2014 harvest to be issued on Oct. 7.

(BusinessDesk)


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