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Satara earnings drop 24%

Wednesday 10th March 2010

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Satara Cooperative Group posted a 24% decline in full-year earnings, as a poorer harvest reduced fruit volumes, prompting a focus on increased efficiencies, including new automatic fruit packers.

Earnings before interest and tax fell to $4.7 million in calendar 2009, from $6.2 million a year earlier, the cooperative said. Satara has two classes of shares, transactor and investor. Grower transactor shareholders will get 20 cents per tray rebate, up from 12 cents a year earlier, and the two cents a share dividend payable to investor shareholders.

“Our major focus has been on labour utilisation, and a focus on technology as a way and means to control costs,” said chief executive Wes Anderson-Smith.

“This business, like many in the primary sector has fine margins. We have found ways to slim the organisation down, while continuing to do all we can to drive grower returns.”

One metric of packer/coolstore efficiency is the amount of fruit loss, with Satara’s 1.47% loss for Gold kiwifruit being “exceptionally low” and superior to any other Bay of Plenty packer, Anderson-Smith said. Orchard management is one determinant of fruit loss, but by creating a risk profile of that orchard and managing the fruit appropriately Satara has been able to minimise the quantity thrown out, he said.

A key efficiency gain for the company has been the joint venture development with an Auckland company of automatic packaging machinery. These new machines can pack an entire tray of kiwifruit at a time, compared with other automatic packers that only pack one at a time. The automatic packers were showcased at Fruit Logistica in Berlin in February, “and we’re now getting inquiries for them from all around the world,” Anderson-Smith said.

According to information on the Fruit Logistica website, the Satara automatic packer can pack up to 750 fruit a minute compared to a hand-packing maximum of 90 fruit a minute.

The growth of this side of the business could a key development in the future, but currently Satara’s concentrating on maximizing orchard gate returns, Anderson-Smith said.

“We do need to be innovative because we’re so far from the market,” he said. “We’re always looking at ways we can take costs out of the business.”

The packing and distribution of avocados is a growing part of Satara’s fruit mix. Though avocado volumes are relatively small compared to kiwifruit the company doubled the number of avocado trays packed, as well as increasing the number of growers supplying the fruit.

Satara’s NZAX-listed investor shares traded last week at 62 cents and have declined 17% in the past 12 months.

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