Bracing for bad news
Listed produce grower and exporter Seeka says a substantial drop in kiwifruit volumes this year may push the company towards an operating loss.
The listed company, one of the country's major kiwifruit packhouse operators, packed just under 30 million trays this season, compared to 42m last year.
Seeka has informed the NZ Stock Exchange that its result for the full year to December 31, 2023 is likely to be a net loss before tax of between $20 million and $25 million.
Seeka chief executive Michael Franks says the company's regional market share is comparable between years and the lower volumes primarily relate to record low per hectare yields from orchards across all regions.
Franks says all growing regions experienced adverse weather events: a severe frost October last year, storm in January and February this year affecting the Gisborne and Hawke's Bay that also impacted the Bay of Plenty and Coromandel, and wetter conditions during the pollination and throughout the growing season.
He says Seeka is a seasonal business and expects to record a profit in the six months ended June 30, 2023.
"However, as a result of much lower kiwifruit yields than expected, inventory levels in cool stores are low and the company expects to record a loss in the second six months ending 31 December 2023."
Franks says the company has put in place cost containment measures and is progressively reviewing and restructuring every business unit. It has engaged with its banking syndicate through a renewal process and expects to finalise a deal this week.
Franks adds that Seeka anticipates improving volumes in 2024, reflecting better growing conditions with El Nino weather patterns, winter chill, increased areas of new orchards coming into production and better frost impact mitigation preparedness by growers.
Seeka will release its 6 months result by August 31.
Seeka is the second major fresh produce trader to signal a financial loss this year.
Last month T&G Global informed NZX that it is expecting a loss before income tax of between $28m and $34m due to damage caused by Cyclone Gabrielle and other weather-related events.
T&G's forecast allows for all known cyclone impacts (including clean-up costs) and includes a provision for the one-off writedown of trees and planting structures devastated by the event.
Meanwhile T&G's New Zealand apple crop has now been fully harvested. While its overall New Zealand supply volumes are down 19% on last year, it says - at this stage - the crop is 14% sold.
T&G adds that the pricing outlook appears strong, particularly for its premium variety Envy.
