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Seeka, with shares punished by PSA, reiterates 9-month profit guidance

Thursday 25th November 2010

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Seeka Kiwifruit Industries, whose shares have lost a quarter of their value in the wake of the Psa outbreak, has reiterated its forecast for earnings growth in the first nine months of the year.

Earnings before one-time items and tax for the nine months ending December 31 will be $11.5 million to $12.5 million, up from $9.8 million in the same period a year earlier, the company said in announcing its first-half results. The company, which is changing its balance date to March 31 from December 31, first gave the guidance at its annual meeting in August.

Seeka gets the bulk of its earnings in its first half, when profit climbed 35% to $11 million, reflecting the seasonal nature of the fruit. The shares last traded at $2.30, having sunk from $3.10 on November 2.

"The company confirms the forecast guidance subject to any unknown impact that Psa may have on the valuation of its biological assets," it said in the statement.

Although occurring outside the reporting period, the industry has detected an outbreak of the bacteria. Orchards have been confirmed with Psa across a wide area with a significant occurrence in the Te Puke region.

The kiwifruit industry and the government are jointly funding a $50 million compensation package for managing the costs of the outbreak of Pseudomonas syringae pv actinidiae (Psa), which has been confirmed to have spread nationwide, though with the biggest occurrence around Te Puke.

Overseas, experiences in Italy show that unless contained, the effects of this disease "are potentially devastating," Seeka said. "The New Zealand kiwifruit industry has moved rapidly and agreed a strategy of aggressive containment. The industry has agreed to orchard management protocols, including best-practice hygiene principles, to contain the outbreak."

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