Loyalty payment rise costs Zespri dear

Increased loyalty payments to growers have seen single-desk kiwifruit exporter Zespri record a 10 per cent drop in profit for the half-year to September despite a 10 per cent jump in sales.

Zespri's unaudited net profit after tax was $24.9 million for the period, compared with $27.8 million the previous year.

Global kiwifruit sales increased to $818.7 million, compared with $742.6 million last year.

Chief executive Tim Goodacre said the stronger revenue performance was driven mainly by a weaker dollar and strong in-market sales.

He said the profit would have been higher if Zespri had not increased loyalty premiums to growers from 10c a tray to 19c.

Zespri's single-desk status is backed by regulation but Goodacre said Zespri was trying to give growers a commercial incentive to stick with the export marketing system.

"We're saying to them that we want to put more than regulation around it because we have a very clear view that unless the growers want the system to stay we won't have the regulation."

The company was predicting a full-year profit after tax of $22.8 million, down from $26.4 million in the previous year.

The full-year forecast included an expectation that loyalty premiums paid to growers would total $14.7 million, compared with $8.2 million last year. Zespri intended to declare an interim dividend of 50c a share, payable in February.