Seeka cuts earnings forecast on smaller crop

Friday 10th May 2019

Kiwifruit grower and marketer Seeka has cut its full-year earnings guidance by $4 million due to reduced harvests in both New Zealand and Australia.

Group earnings before interest, tax, depreciation and amortisation are likely to range from $32.5 million to $33.5 million in the 2019 calendar year, down from the $36.5-$37.5 million range the Te Puke-based company signalled a month ago.

Seeka, the biggest kiwifruit producer in New Zealand and Australia, said unseasonably hot, dry weather in both countries has reduced fruit size and crop volumes.

It now expects to pack 33.54 million class 1 trays of local kiwifruit this season, up from 30.23 million last year, but down on the 36.33 million it had previously been expecting.

Expected margins should still be achieved, as will be the initial targets for the Aongatete Coolstores the firm acquired in the Bay of Plenty in March for $25 million.

Seeka said its Australian operation has been significantly impacted by record temperatures there. Kiwifruit volumes will be down about 26 percent from last season at 1,900 tonnes. The Green Nashi harvest will be 18 percent lower at about 900 tonnes.

Seeka has more than 250 hectares of orchards in Australia, where it is still expanding. They accounted for about 7 percent of group revenue and 21 percent of the firm’s operating assets last year.

It says it still expects to break-even there at the ebitda level during the current year.

Seeka noted that it continues to negotiate the sale of orchards in Northland it has secure supply agreements with. Any further sales may have “positive upside” for earnings and the market will be informed as sales occur.

Seeka shares last traded at $5.25 and have gained about 22 percent so far this year.

(BusinessDesk)

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