T&G up 18.6% in tough trading conditions

Thursday 13th August 2009

Turners & Growers, the fresh produce merchant and processor, reported an 18.6% improvement in half-year earnings to June 30 as a strong New Zealand dollar and turbulent trading conditions created challenges across the group.

Net income was $6.047 million in the first half, or 4.79 cents a share on a pre-dilution basis, up on $5.098 mllion a year earlier.

However, earnings per share were higher at 8.08 cents in the earlier period, which included a net $3.6 million of one-off profits which boosted unadjusted net earnings to $8.698 million for the six months to June 2008.

The latest result was achieved on sales of $314.9 million for the period, compared with $304.7 million for the same period a year earlier.

As with last year's first six months, T&G reported negative cashflow on ordinary operations of $59.920 million ($56.276 million) as payments to suppliers and employees were higher in this part of the year than cash received from customers.

"The result is adequate considering the current economic uncertainties and apprehension about New Zealand's recovery," the company said in a statement to the NZX. Weak fresh fruit and produce prices and demand for the first six months of the year appeared now to be giving way to an uplift in turnover.

"We could regain ground lost, in the next months."

However, the company is "expecting the fuly year result to be lower than last year's."

"Directors are confident of the underlying strength of the Group but are reluctant to predict the outcome in an industry which relies on so many factors."

T&G shares were unchanged at $1.55 shortly after the announcement, which sparked no immediate trading. The company will not pay an interim dividend and reported it expected to make savings on interest costs over the full year of around $2 million by changing banks to BNZ and Rabobank.

T&G described difficult trading conditions and some management interventions across its porfolio, with the exception of Delica, the company's second export operation, which "continues to perform admirably and is trading well above last year".

"Delica apple sales are mainly to Asia and as a pure trader they generally exit the market more quickly than ENZA so are not overly exposed to tail end market conditions," the company said.

While the ENZA contribution was up on the previous half year, a stronger New Zealand dollar and softening fruit prices in export markets meant "we could see a softening of the result for the year end".

ENZAFoods was "having a tough year and considerably down on 208", caused mainly by a glut of apple juice concentrate in the Chinese market.

Businesswire.co.nz

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