Zespri facing 'headwinds' after strong year

Lain Jager, CEO of Zespri, said that foreign exchange continued to affect grower returns over the financial year. Photo / John Borren

Kiwifruit marketer Zespri enjoyed a strong year in 2014/5 but faces "headwinds" in the year ahead from weakness in the euro and yen, and the return of Chile to the market after its biggest southern competitor bounced back from severe, crop-damaging frosts, chief executive Lain Jager has told the annual meeting today.

The grower-funded organisation - which markets the fruit for the world outside Australia - has enjoyed a strong bounce-back after the sector was ravaged by the effects of the Psa virus in 2010, with increased volumes and good grower returns recorded for the year just passed.

Jager said that foreign exchange continued to affect grower returns over the financial year ended March 31 - before the New Zealand dollar started to fall sharply - reducing payments by $58.1 million in 2014/15. However Zespri's hedging policy offset the strength of the NZ dollar by $103.7 million compared to the spot rate, he said.

Orchard gate returns per tray for green were up to $6.01 and reached the highest-ever average per-hectare returns at $53,884, due largely to sales performance, increasing average yields and a shortage of Chilean kiwifruit in the market due to severe frosts in Chile.

"While Zespri is very positive about the outlook for delivering strong, sustainable returns to growers and shareholders, we note considerable headwinds weighing on future returns including the relative weakness of the euro and yen and recovery of Chilean volumes," he said.

Zespri chairman Peter McBride told grower-shareholders that the organisation had delivered $1.57 billion of sales in the 2014/15 season, up 16 per cent on the previous year.

Total fruit and service payments for the season were up 17 per cent to $939 million. Volumes of New Zealand kiwifruit sales are up 11 per cent to 95.2 million trays this season, and were set to grow to over 130 million trays in the next five years.

Zespri kiwifruit for sale at a wholesale fruit market.

"As well these headline numbers, Zespri delivered excellent returns to growers and developed sales platforms for the increasing gold volumes in both new and existing markets," he said in speech notes for the annual meeting.

The Psa tolerant SunGold (Gold3) had performed very successfully on the orchard, throughout the supply chain and in the market, he said.

Gold volumes were set to grow from 18.7 million trays in 2014/15 to around 30 million trays in 2015/16 to over 60 million trays by 2019/20.

Volumes of non-New Zealand gold were also set to grow strongly to match the increase in NZ production and provide consistent year-round supply, forecast to grow from 2.5 million trays in 2014/15 to around 15 million trays in 2019/20.

Zespri's net profit after tax has doubled from $17.2 million in 2013/14 to $34.6 million in 2014/15. This reflects an exceptional one-off factor of $19.6 million of unpaid revenue from new cultivar licences from previous years, which were recognised due to greater certainty around SunGold's performance in a Psa environment.

Excluding this figure, Zespri's normalised profit would have been $21.5 million.