Turners & Growers full-year profit falls 1.9% on processing

Turners & Growers [NZX: TUR], the fruit marketer controlled by Germany's BayWa, posted a 1.9 percent drop in full-year profit as improved returns from its pipfruit business were offset by losses from processed foods and New Zealand produce trading.

Profit fell to $16.6 million in calendar 2014, from $17.2 million a year earlier, the Auckland-based company said in a statement. Sales declined 0.7 percent to $727 million.

Turners' stock has declined 5 percent in the past 12 months - supply shortages in its international produce unit and a drop in fruit volumes for its processed foods business were flagged in its first-half results in August and continued through in to the full year. Processed foods, which includes the EnzaFoods apple juice concentrate business, was also hurt by the kiwi dollar's strength against the Australian dollar, while NZ produce trading suffered from an abundance of tomatoes on the market, a smaller mandarin crop and competition for the company's Bonita bananas, which forced it to discount.

The mixed performance of its business units didn't deter Turners from expanding, with the $51.6 million acquisition of the assets of Apollo Apples and agreement to buy glasshouse tomato growers Great Lake Tomatoes and Rianto.

Pipfruit had a stand-out year, lifting operating earnings to $23 million from $21.2 million, even as hail storms kept volumes unchanged from 2013 and price pressures from markets such as Europe, where the impact of economic sanctions against Russia were evident, the company said.

Operating profit at international produce dropped to $1.9 million from $4.7 million, reflecting the impact of lower volumes and frost damage on kiwifruit, and lower prices for grapes in Asia.

New Zealand produce posted an operating loss of $3.2 million, after breaking even in 2013, and processed foods reported a loss of $5.5 million compared to a profit of $520,000 in 2013. The volume of fruit available for processing was 25 percent below normal year levels, leaving the company with costs of under-used plant. Processing also incurred restructuring costs.

Turners' other businesses, which include the Floramax flower auctioneer, posted an operating profit of $11.2 million, from a year-earlier loss of $510,000. However the results included a $13.3 million gain on the acquisition of Apollo Apples, which settled on Dec. 19.

The shares last traded at $1.90, and are unchanged this year.

(BusinessDesk)