Seeka upgrades profit guidance, pays $4 mln to support growers

Wednesday 23rd December 2015

Seeka Kiwifruit Industries, the largest kiwifruit grower in Australia and New Zealand, says profit for 2015 will be at the upper end of its guidance as insurance claims related to a fire at its Oakside plant are settled.

In August the company said it expected profit to rise between 30-and-40 percent in calendar 2015, with shares hitting an eight-year high of $3.75 off the back of the announcement. However in October it warned investors that profit could be lower due to uncertainty about whether some of the fruit lost in the fire in the Bay of Plenty was insured, and said profit could be anywhere between 10-and-40 percent above 2014 levels.

The company today said net profit would be between 25-and-35 percent above 2014 levels, driven by improved results from its Glassfields divison, which provides ripening and delivery services to retailers. Profit from New Zealand operations is expected to be between $3.96 million and $4.27 million.

Seeka also paid just over $4 million to its pool of growers to maintain payments and minimise the risk of loss from the fruit that was destroyed or damaged in the fire. This money will be recovered from any further insurance proceeds should the claim be accepted by the insurer, it said.

The cost of this payment to growers is built into its profit forecast, and Seeka said there is potential for further upside in the event of an insurance payout.

However, Seeka warned its new Australian business will deliver an after tax loss in the first year of its operation of between $750,000 to $1 million due to transaction costs and stamp duty. It bought Bunbartha Fruit Packers for A$22 million in August, and the company says the business is proceeding well. It's expected to be profitable in 2016.

Shares in Seeka rose 0.3 percent, or 10 cents, to $3.37 and have risen by 7 percent since the start of the year.

BusinessDesk.co.nz

Comments from our readers

No comments yet