Zespri's profit slumps on fuel costs, Psa

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Monopoly kiwifruit export marketer Zespri Group is warning growers that returns in 2012 are likely to be weaker than this year's, though demand for the traditional green variety are holding up better than for the higher-value gold variety.

Zespri's net profit fell 71.8 per cent to $7.3 million in the 12 months ended March 31, the company said in a statement today.

The result reflected a combination of higher fuel costs, a strong New Zealand dollar and the emergency response to the discovery of the Psa canker on some kiwifruit vines,which cost $12.9 million.

Zespri released final returns for growers for 2010/11, showing a 9 per cnet orchard-gate increase on the previous year for green kiwifruit at $7.31 a tray, excluding loyalty payments, which increased by 10 cents a tray to 25 cents.

That was near the top end of its forecast $7-to-$7.50 range, though total sales volumes for all kiwifruit fell 1 per cent and total revenues at $1.5 billion were up just 1 per cent.

Average per tray payments to all Zespri growers in 2010/11, including loyalty payments at 25 cents a tray, were up 4 per cent at $8.68 a tray.

Final returns for the season on the gold variety were $12.65, above the $12 to $12.50 per tray predicted, but in the season ahead, Zespri is predicting gold prices of between $11.60 and $12.20.

Organic green kiwifruit, the smallest category produced, returned $9.08 a tray in 2010/11, compared with a predicted $8.40 to $8.90, and higher than next season's returns predicted at $8.30 to $8.90 a tray.

Results in the last year had benefited from "strong growth in Asian markets, which delivers both a positive market mix effect and supports pricing across all markets as demand generally outstrips supply," said Zespri chairman John Loughlin.

However, a predicted 28 per cent increase in gold kiwifruit production in the year ahead, and 9 per cnet increase for the organic green variety "will put pressure on average market returns as more fruit will go to into lower returning markets than in previous years."

"The early signs for the 2011/12 selling season are for another challenging year in the face of further increases in oil prices and a strong New Zealand dollar," said Loughlin.