T&G Global first-half profit halves as inclement weather delays NZ pipfruit harvest
T&G Global, the fruit marketing firm controlled by Germany's BayWa, reported a 49 percent slump in first-half profit as poor weather weighed on the timing of the domestic pipfruit harvest, reducing fruit volumes and margins.
Net profit attributable to equity holders fell to $11.3 million, or 9.1 cents per share, in the six months ended June 30, from $22 million, or 18.2 cents, a year earlier, the Auckland-based company said in a statement. A 19 percent gain in revenue to $501.6 million was offset by a 23 percent increase in the cost of purchases, raw materials and consumables used to $355.4 million and a 23 percent gain in its wage bill to $83.2 million.
The pain was most acute in T&G's dominant pipfruit business, which grows, packs, stores and markets pipfruit. Revenue jumped 63 percent to $238 million, although the cost of raw materials almost doubled to $163.8 million, leading to a 40 percent slide in earnings to $11.8 million.
"Weather events impacted on the timing of harvests and the volume and quality of fruit harvested from the New Zealand orchards," chairman Klaus Lutz said in a statement. "Inclement weather also affected third party growing partners in New Zealand and internationally, leading to an overall decrease in the volume of fruit available."
T&G sharpened its focus on selling fruit earlier this year, selling its FloraMax flower auction business for $2.3 million and reaping a net gain of $1.7 million, while renegotiating its position in the UK Worldwide Fruit partnership with Fruition PO and increasing its stake in US production marketing firm David Oppenheimer, also known as Oppy US.
The company's international produce division posted a 6 percent decline in revenue to $113.4 million and a halving of profit to $1 million as unseasonable weather in Australia, New Zealand and South America lowered the volume and quality of grapes, blueberries and asparagus, while it New Zealand produce division posted a 1.5 percent increase in sales to $108.4 million for a 7.1 percent gain in earnings to $4 million.
T&G's processed foods division posted a 13 percent decline in sales to $40.7 million, and while earnings climbed to $848,000 from $67,000 due to better cost management in the Australian Fruitmark business, the New Zealand processing unit "remains under close review".
The company's shares were unchanged at $3.40, up 6.3 percent so far this year.