27 Feb 2023

Kiwifruit exporter Zespri expecting 40 percent dive in profits this year

1:55 pm on 27 February 2023
Zespri expects a lift in gold kiwifruit production next year.

Photo: AFP / Monty Rakusen / Cultura Creative

New Zealand's largest horticultural exporter Zespri is expecting up to a 40 percent dive in its profit this year.

The company has also confirmed to green kiwifruit growers that they will not receive any more significant progress payments for fruit picked last autumn.

Zespri has a global operating revenue of $4 billion. It has been beset with fruit quality issues in overseas markets this season, costing it millions of dollars and threatening its reputation.

In a letter to shareholders, chairman Bruce Cameron said the forecast range of corporate net profit after tax for the year ending 31 March 2023 is $217 million to $227m, including licence release income.

This is down from the last financial year's record profit after tax of $361.5m, with the bottom end of the range below the November 2022 forecast range.

Earlier this year, green growers received a shock announcement from the exporter that fruit payments would be about 60 cents a tray lower than forecast.

No progress payments were paid in February and it has just confirmed to growers they will receive little, if any, more money this year.

In the letter, it said March progress payments for Green and Green Organic growers will be limited to specific sizes with the average March progress payment over all sizes being 3 cents per tray for Green and 4 cents per tray for Organic Green, but the impact for each individual grower will vary.

It pushed orchard gate returns for some growers to below the cost of production.

The exporter was also acknowledging difficult financial times for green growers by nearly halving the reserve price it had set for its gold licence auction which opens next month.

The letter said the board reviewed the opening (reserve) price for both the Gold3 Open Pool (150ha Unrestricted Gold3 Pool) and the newly introduced Hayward/Sweet Green cutover licence pool (200ha Restricted Gold3 Pool), in the ascending-price open auction.

The opening price for both Gold pools will be reduced from $340,000 (excl. GST) to $225,000 (excl. GST) per hectare.

The reserve price now represents approximately a 50 percent discount on the 2022 minimum accepted price for the Gold pool and constitutes a starting point for bidding only. There was no change to the opening price for the Red pool.

The median price for the gold licence last year was about $800,000ha.

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