The kiwifruit marketing body — which represents 2500 New Zealand growers — lifted profits by 38 per cent to $101.8 million in 2018.
And it expects higher returns still in 2019, forecasting earnings of up to $180m and a dividend per share of up to $1.40, compared to 76 cents per share last season.
Growers have every reason to smile at that sort of performance and it's one reason why Zespri snared the Deloitte Digital/Marsh Company of the Year Award.
But the judges were also quick to point out that those returns aren't a one-off. They also represent the culmination of Zespri's long-term strategy and dedication to innovation.
"When you look at the volumes, the tray returns, the growth in China, the share price — all of those measures — the company looks very successful," said Forsyth Barr managing director and Top 200 judge Neil Paviour-SmithZespri also managed the transition to chief executive of Dan Mathieson (who took over from long-standing chief Lain Jager last November) without losing any of its financial momentum.
The Mount Maunganui-based company will have to grapple with another change at the top next February, when chairman Peter McBride steps down.
McBride, chair since 2013, oversaw a premium brand-led strategy at Zespri and the expansion of the SunGold variety to meet burgeoning demand in the markets.
SunGold, developed in response to the Psa outbreak in 2010, has played a key part in the company's turnaround since the bacteria ravaged the industry.
That fruit is increasingly popular in the important Chinese and Japanese markets and is forecasted to become even more lucrative for growers.
SunGold is expected to return $10.28 per tray in the 2018/19 season, up from $10.07 a tray, with the average return per hectare for growers rising to $138,973 from $114,345. That compares to expected returns of $5.47 per tray and $64,455 per hectare for green kiwifruit.
Zespri has now committed to planting 700 more hectares of SunGold fruit every year for the next five years, compared to 400 hectares a year previously.
Paviour-Smith said the kiwifruit industry was an example of how to add value to primary sector exports.
"A lot of politicians and commentators and experts often criticise New Zealand as being poor at adding value to commodity production [saying things like] 'why do we export raw logs' for example," he said.
"Now Zespri is still exporting fruit but it's based around innovation and our expertise as a country in creating this different type of kiwifruit that are commanding these high premiums," he said.
"There's a really good story in there around innovation and a long-term strategy response from the industry.
"The growers who went through the process of evolving their vines or crops to gold are now getting the returns on that."
The financial success of the gold variety is also driving further innovation among growers, with red fruit varieties in the pipeline.
The sweet fruit is two years into a five-year pre-commercial trial stage. When it is commercialised, the red fruit will be able to be grown in all New Zealand kiwifruit areas except for the South Island and Whangārei; areas that escaped the Psa scourge and no new plant material can be taken into them.
The red fruit's promise is not just in its colour and taste but in the fact it can be harvested as early as late February.
This will help Zespri's goal of being able to provide high-quality kiwifruit all year round from both New Zealand and non-New Zealand-based Zespri orchards.
"With the red fruit, Zespri is obviously looking further ahead, so when the world catches up with gold fruit and starts copying and so on they're thinking about 'how can we continue to command a premium for New Zealand kiwifruit'," Paviour-Smith said.
Zespri's success also provided inspiration for others in New Zealand's horticulture sector.
The Miro partnership — owned by more than 20 Māori trusts and iwi from the Far North to the top of the South Island - and state-owned science company Plant and Food Research revealed its plans to "do a Zespri" with blueberries and similar crops.
Horticulture, led by a continuing kiwifruit sales bonanza, is expected to be New Zealand's fastest-growing primary export sector in the year ahead, according to Government forecasts.
Ministry for Primary Industies' latest situation and outlook report says horticulture exports are forecast to rise by 13.1 per cent to $6.1 billion in the year ending June 2019, with kiwifruit export revenue expected to increase by 23 per cent after a large harvest in March/April and due to rising kiwifruit prices.
Zespri. Photo / Alan Gibson
Apple and pear export volumes for the 2018 calendar year are expected to top the 20 million carton milestone — 360,000 tonnes — last achieved 14 years ago, due to strong European and Asian market demand.
Overall, primary export revenues are forecast to lift by 2.5 per cent to nudge $44b in the period.
Company of the year finalist: Tatua Dairy Company
Tatua Co-operative Dairy Company proves good things come in small packages.
The Morrinsville-based dairy co-operative, which has an estimated 1 per cent of the country's milk collection, notched record revenue of $357m and earnings of $127m over the last season. That saw it confirm a cash payout of $8.10 per kg of milksolids to its shareholder-farmers.
A long-time niche producer with 370 staff, Tatua has delivered much better returns to its owners than its competitors and the Deloitte Top 200 judges noted it had consistently delivered $1-2 more per kg of milk solids than its rivals each season.
Tatua Cooperative Dairy Company in Morrinsville. Photo / Supplied
A previous winner in these awards for its corporate strategy, selecting it as a Company of the Year finalist the judges praised Tatua's focus on containing its supply area as well as its value-add production line: "They have done this for decades, even before the creation of Fonterra, Tatua was always a high-value producer.
"And they have posted a superior co-operative return compared to the rest of the industry."
The judges noted the well-targeted specialty strategy Tatua has played out in the Chinese and Japanese markets.
Headed by Brendhan Greaney, its performance has impressed industry analysts who see it as the country's "benchmark value-added processor".
"Tatua's financial performance has been outstanding. Its revenue per unit of milk is the highest in the industry. This has translated into high returns on its $238m of assets" consultancy TBD advisory said earlier this year.
Company of the year finalist: Restaurant Brands
Restaurant Brands has developed a tasty recipe for returns — so much so that a giant Mexican fast food investor wants a bite.
The company's ability to grow domestically while expanding overseas through new acquisitions has seen its value steadily increase in 2018.
It attracted the attention of Mexico's Finaccess Capital, which last month made a $881.5 million bid, or $9.45 a share, for three-quarters of dual NZX/ASX-listed firm.
The bid values Restaurant Brands — which owns KFC, Pizza Hut and Carl's Jr. in New Zealand — at $1.18b, a healthy premium to its $1.06b market capitalisation at the start of November.
Pizza Hut. Photo / Dean Purcell
Headed by Russel Creedy, Restaurant Brands' successful overseas expansion impressed the Deloitte Top 200 judges with its skilful execution and sustained momentum.
A large part of Restaurant Brands' success has been its ballooning overseas portfolio. Its 61 KFC stores across the Tasman boosted earnings 43 per cent in the 28 weeks to September by 43 per cent.
Australia sales made up 20 per cent of the group's $69.2m of earnings before interest, tax, depreciation and amortisation (EBITDA) over that period.
Restaurant Brands' Hawaiian portfolio — which includes 36 Taco Bell stores and 45 Pizza Hut outlets — recorded EBITDA of $12.8m over that time.
But it's the firm's 94 KFC restaurants in New Zealand delivering the fattest chunk of the company's earnings. Same-store sales were up 6.2 per cent in the 2018 financial year, with EBITDA up 7.4 per cent over the period.
Chief Executive Officer of the Year finalist: Xavier Simonet, Kathmandu
French-born Xavier Simonet has delivered strong sharemarket returns at Kathmandu since taking on the chief executive role just over three years ago.
The retail sector is a tough one with many traditional players facing structural challenges as the shift to online shopping powers on at pace.
Xavier Simonet of Kathmandu.
Kathmandu has been recognised as an example of a traditional retailer doing it well.
"Kathmandu has been the most successful at creating a good omnichannel experience," Forsyth Barr analyst Jeremy Simpson told the Herald last month.
Online sales now account for 9.4 per cent of total sales versus 7.5 per cent last year. A 22 per cent rise in website traffic has driven a 36 per cent lift in online sales.
The outdoor equipment and clothing retailer posted a net profit after tax of $50.5 million for the 12 months ended July 21, up 32.9 per cent, or $12.5m, from the previous year.
At the time of that announcement Simonet indicated that the company was eyeing further expansion into the Northern Hemisphere following the record year and successful acquisition of US firm Oboz Footwear.
Simonet has a strong 23-year history in the apparel business.
He studied political science at the Paris Institute of Political Studies, or Sciences Po, before winding up at luxury group Louis Vuitton Moet Hennessy.
He was there for 12 years between 1995 and 2006, in various roles and locations including Hong Kong, Singapore, Sydney, London, Paris and Scandinavia.
He also completed a certificate in marketing at Harvard and has a diploma from international business school HEC Paris.
Before taking the reins at Kathmandu, Simonet worked in London as chief executive of luxury leather handbag and accessory company Radley & Co. where he was instrumental in trebling profits over his two and a half year stint with the company.
Simonet told the Herald in April this year on his reasons for joining Kathmandu.
"There were two key reasons why I joined Kathmandu. One was because this business is around travel, and this is my life, so ... the alignment on that value of travel, and the second one, is sustainability.
"My life's always been around travel and so I've always been eager to take opportunities that are related to travel."
And of sustainability and environmental consciousness, Simonet says "Sustainability is really in the DNA of the company, it's not just something we've just started.
"Our sustainability work covers a variety of prioritisation across materiality, human rights, right down to our materials and products and our operational footprint."
He is excited by the new direction the company is looking to take under his lead.
"[We are] starting to diversify the risk profile of the company by having a stronger presence internationally, by having a stronger presence in another channel — not just retail — and this other channel is wholesale as Oboz operates through wholesale customers in the States".
Chief Executive Officer of the Year finalist: Fraser Whineray, Mercury Energy
Leading Mercury since September 2014, Deloitte Top 200 CEO of the Year finalist Fraser Whineray has overseen a complete rebranding of the company — formally known as Mighty River Power.
Fraser Whineray, chief executive of Mercury Energy. Photo / Dean Purcell
The rebrand was recognised in FY2018 with both of New Zealand's premier brand/advertising awards (the Grand Effie at the Effies and the Supreme Award at the TVNZ New Zealand Marketing Awards).
Mercury was also named as the best workplace in New Zealand (IBM Best Workplace Awards — assessed from its FY2017 employee survey results). FY2018 saw record earnings (EBITDAF), and operating costs have been held flat for five consecutive years.
Meanwhile it has delivered dividend growth and is showing strong momentum early in FY2019.
All of the company's electricity generation is renewable and Whineray has demonstrated a personal passion for renewables — famously getting around in both electric cars and on an electric bike which he's said is a big part of surviving due to Auckland's increase in vehicle traffic.
He established a commitment among 30 business leaders to transitioning at least 30 per cent of their vehicle fleets to electric vehicles (EVs) in a three-year period.
Mercury has exceeded its target of transitioning all viable vehicles in its fleet to EVs.
Whineray studied chemical engineering at Canterbury University. Besides other senior roles in the dairy industry, he was also an investment banker with Credit Suisse First Boston, in Wellington and Sydney.
Whineray joined Mercury back in 2008 as GM Generation and appointed chief executive a little over 4 years ago in September 2014.
On his applying for the job, Mercury chair Joan Withers said that the board were blown away with his vision for the company's strategies, people leadership as well as the way he approached challenges in the industry.
With vast experience working with chief executives, she has said that those who succeed are those who surround themselves with the best and brightest without feeling intimidated by them or viewing them as a threat to their position. She told the Herald back in 2017 that "Fraser exemplifies that.
He's got an enormous amount of energy and is a delight to work with. The great thing about him is that he does take counsel."
Diversity and Inclusion Leadership finalist: Downer
Infrastructure and integrated facilities services group Downer understands the importance of diversity and inclusion within the workplace and has set a goal to "be an employer of choice with a reputation for promoting diversity and inclusion with a workplace environment that facilitates and celebrates this".
Diversity and Inclusion Leadership finalist was Downer. Photo / Supplied
The company partnered with Te Puni Kokiri to realise their goal and create Te Ara Whanake, their Māori Leadership programme, in order to strengthen the diversity within the leadership team.
The programme has proven a success across the workforce, with some 112 graduates since 2014 and another 75 nominations for the 2018 programme.
Nine of the first 13 participants received a promotion within three months of completing the programme.
Downer are proud of the fact that Māori already make up 23 per cent of their workforce, but identified that very few of these employees were in leadership roles so they created the programme to change this and widen diversity throughout all levels of the company.
Mihi are now used to open meetings. Te Reo is becoming more widely utilised and Māori blessings of land and other cultural practices have been introduced via the programme and are "becoming part of Downer's DNA". The company reports a cultural change starting in the workplace and spreading out into the wider community.
A promotional video for the programme, which hears from some of the participants, supports this: "From day one, I started taking a more positive attitude for being recognised in the workplace and trying to uphold myself as a Māori in the workplace" one candidate says.
"This is the first time I've been in a Māori programme — I've never, ever learnt how to be a Māori in a business sense, so it's been quite an eye-opener", says another.
There has been active engagement from the leadership teams says Downer New Zealand chief executive Steve Killeen. "We have had some really significant events that truly celebrate how amazing our people are."
And on his personal involvement after a morning spent at Hongoeka Marae in Plimmerton sharing his own leadership journey with participants in the Te Ara Whanake: "It was an inspirational morning as we reflected on our pepeha, a way to explore our heritage together."
They have since started looking at continued post-programme support with an alumni group for graduates of the initiative.
As for the future of the company's diversity and inclusion initiatives, it continues to work towards gender balance with a target of 20 per cent of women (currently standing at 16 per cent) into the business by 2021 and hopes to extend the fundamentals of the Te Ara Whanake programme across to its Australian counterparts to engage Aboriginal and Torres Strait Islander employees.
The judges commended Downer's leadership team on the aspiration to share the programme more broadly with the industry, mainstreaming Māori culture and language within the business and furthering a meaningful relationship with iwi.
Diversity and Inclusion Leadership finalist: Vodafone
The purpose of Vodafone's Employee Networks initiatives are to "foster positive and meaningful connections between Vodafone colleagues, their whānau, and the community", which the company says aligns directly to its "overarching company purpose" to "connect for a better future."
Diversity and Inclusion Leadership finalist Vodafone.
Working on a "people-centric, bottom-up approach" has allowed for employee and brand engagement within the community, it says.
The information media and telecommunications giant's Employee Networks is a company-wide term that houses a variety of diversity and inclusion structures and programmes.
"We believe strongly that everyone needs to bring their own selves to work and to know that they are welcome," says Meera Kaushik, External Communications Advisor, emphasising how "very proud" the organisation is of its diversity and inclusion initiatives.
In New Zealand, specific programmes include a rebranding of a Cultural Group to Te Hā Whero, Vodafone's Kapa Haka team in order to align with the company's Māori Network, Te Pū Whero. It says the alignment strengthened the 40-strong team's sense of identity and purpose, while reinforcing Vodafone's commitment to te ao Māori.
Other programmes under the Employee Networks umbrella include Women in Technology, Vodafone New Zealand Women's Network and Vodafone NZ Rainbow Whānau.
The company set four key diversity and inclusion targets for the 2018/19 financial year: 1. Women: target of 40 per cent vs. actual of 39 per cent; 2. Māori: target of 7 per cent vs. actual of 6 per cent; 3. Youth: target of 16 per cent vs. actual of 13 per cent; 4.
Rainbow Whānau members: target of 300 people vs. approximately 500 unique members this year.
"Critical to the sustainability of our networks is an enduring business willingness to ensuring our people from all across the business have a voice in shaping the future of Vodafone New Zealand," they say in relation to the importance of diversity and inclusion.
With this comes a confidence that having platforms that showcase employees' own sense of identity empowers them to "be themselves and know that they belong at Vodafone".
The hope is that they will begin to see a redistribution of the power more equally towards minority groups within the organisation.
The programmes had the firm backing of departing CEO Russell Stanners and the executive team as well as incoming CEO Jason Paris who said on his third day his personal purpose was to "give every New Zealander an equal opportunity to succeed."
The Employee Networks framework has been shared with organisations such as Fonterra, The Warehouse Group and Lion Nathan.
The judges were impressed by the overall value of diversity and inclusion within Vodafone which shows a provision of clear and strong processes enabling employees to "self-organise and engage in activities that are important to them".
