Zespri tips profit boost from Gold3 expansion

Chief executive Lain Jager said strong demand from growers for Gold3 reflected the industry's confidence in the product.

The release of 400ha to grow Gold3 kiwifuit under licence in 2016 will result in a hefty increase in marketing company Zespri International's corporate profit for the 2016/17 year.

Zespri said its updated forecast is for a corporate profit of $70-$75 million, up from $25-$30 million forecast in April, and up from its 2015/6 net profit of $35.8 million.

"This is a significant increase from the forecast range announced by Zespri in April because it now takes into account licence revenue of $50.2 million after tax from the release of 400ha of Gold3 licence in 2016," chairman Peter McBride said in an email to growers.

Increased revenue would be realised over a number of years. The take-up of deferral terms by a substantial number of bidders meant that the licence release would not generate net cashflow to Zespri until the 2018/19, 2019/20 and 2020/21 financial years.

At that time, the Zespri board would make decisions regarding use of funds and distribution to shareholders, it said.

The closed tender bid process for Gold3 licence attracted more than 1000 growers bidding for licence. The Gold3 cultivar, which is resistant to the Psa virus that devastated orchards from 2010 to 2013, has played a pivotal role in the sector's recovery.

Chief executive Lain Jager said strong demand from growers for Gold3 - which is marketed as SunGold - reflected the industry's confidence in the product.

"It's also pleasing to see that, with 266 successful bids at an average size of well under 2ha, this licence release has been widely taken up across the industry."

Zespri will provide an update on the performance of Gold3 in the markets later in the season. McBride said that, by November this year, Zespri should be able to provide the industry with a clear signal regarding the potential release of Gold3 hectares in 2017.