New Zealand headquartered produce distributor T&G Global Limited (T&G) saw its operating profit fall to NZ$15.6m (US$10.6) in 2018 despite an increase in revenue due to business and market challenges and higher operating costs, the firm revealed in its full-year financial results.
T&G reported a revenue of NZ$1.2bn (US$820m) in the 2018 financial year - up by NZ$120m (US$82.2m) on the prior year, but operational and environmental challenges in key business divisions and markets, including a poor New Zealand growing season for apples and the impact of Chinese tariffs, impacted T&G’s 2018 financial result, reducing operating profit by NZ$11.5m (US$7.8m).
The International Produce division also saw adverse weather conditions impact on its cherry season in Australia and the quality of its grape harvest in Peru. Yet despite these climatic challenges, the division reported an increase in operating profit of NZ$3.1m (US$2.1m) in 2018 due to favourable trading conditions in most of its markets, particularly the Pacific Islands.
Meanwhile, after record results in 2017, trading in the New Zealand Produce division returned to more familiar levels, T&G said. Poor growing conditions for tomatoes in early 2018 and an oversupply in the domestic market late in 2018 contributed to a decline in operating profit of NZ$8.2m (US$5.6m) from 2017 to 2018.
Outside of its trading divisions, T&G’s share of income from associates increased from NZ$400,000 (US$270,000) in 2017 to NZ$2.5m (US1.7m) in 2018, mainly driven by the first full year of returns from its investment in The Oppenheimer Group.
Total assets reduced by NZ$50.5m (US$34.5m), mainly through the sale of kiwifruit post-harvest facilities and orchard land, the sale of assets related to the processed foods business and the sale of property in Christchurch.
T&G’s capital expenditure in 2018 was up NZ$6.5m (US$4.4m) to $30.2m (US$20.6m). The increase related mainly to the significant investment in new bearer plants as part of a focus on key categories and securing long term supply of key apple varieties.
T&G’s net profit after tax from continuing operations reduced by $29.8m (US$20m) from $40.2m (US$27.5m) in 2017 to $10.4m (US$7m) in 2018.
"T&G’s strategic focus is on strengthening core business and building vertically integrated produce categories," T&G said in a press release. "A major part of this strategy is to divest of non-core assets and businesses and reinvesting the capital in higher performing business activities.
"With a new CEO, Gareth Edgecombe, who joined the company in July 2018, T&G has undergone a major strategic review and developed a Roadmap for Growth which includes driving global growth in apples and building new global categories, simplifying the operating model, leveraging a strong New Zealand base and streamlining non-core assets," T&G added.