New Zealand kiwfruit marketer announced a consolidated net profit after tax of NZ$21.7 million (£8.2m) for the year ended 31 March 2007 on Monday. The figure marks an 18 percent reduction on the previous period due mainly to a loyalty premium increase.
In 2006, the company introduced an enhanced loyalty premium to share additional profits with growers, who hold 95 percent of Zespri’s shares, thus reducing the company’s net profit. The enhanced premium increased loyalty payments for the period by 150 percent to $20.4m, from $8.2m.
Chief executive Tony Nowell said the enhanced loyalty premium, and from 2007 a reduced Zespri margin, provides assurance that Zespri is doing its best for growers and looking after the long-term interests of shareholders. “Zespri is privileged to be entrusted with the responsibility for delivering
the best possible returns for New Zealand kiwifruit growers through our integrated industry structure,” said Nowell. “It provides us with the critical mass needed to generate premium returns and it’s only right that we fairly share the financial benefits of our industry structure with those who support it.”
Foreign exchange had a positive impact over the prior year and Zespri continued to maintain price premiums in key markets, in many cases over 40 percent more than the next kiwifruit competitor. Net global kiwifruit sales increased 15 percent from NZ$991.3 million in 2005-06 to NZ1.143 billion in 2006-07. Fruit and service payments (including the loyalty premium) increased 13 percent from $577.2 million to NZ$654.3 million, delivering an extra NZ$77 million in industry returns.
New-Zealand-sourced kiwifruit volumes declined slightly to 80.1m trays sold, due to the unacceptably high level of onshore fruit loss which is estimated to have cost the industry more than $50 million. Zespri’s wharf checks were a significant factor in keeping fruit that was not up to export standard within New Zealand, maintaining Zespri’s reputation with customers through the continued delivery of only high quality fruit.
Volumes of non-New Zealand sourced kiwifruit have increased tenfold since 2003-04 to over 6 million trays sold in 2006-07 with an inaugural profit of $4.4 million. “Fundamental to Zespri’s future growth is our ability to provide our key customers with a high quality, differentiated product year-round,” said Nowell.
Zespri has a large amount of Zespri Gold kiwifruit growing under licence in Italy plus smaller volumes in France, Chile, the US, Japan and Korea. Zespri green is being procured in significant volumes from Italy, Chile and France. “We now have commitment to our 12-month supply programme from several key customers and we need to aggressively grow this business to meet future demand.”
The company issued a statement saying it intends to declare a final dividend for payment in August 2007 of 32 cents per fully paid share, in addition to the interim dividend (paid in December 2006) of 50 cents per share. This brings the total dividend for the 2006-07 year to 82 cents per share, representing 100 percent of available profits.
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