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Eastpack Announces $1.5 Mn Profit Following Satara Merger

MEDIA RELEASE

Wednesday 16 April 2014

Eastpack Announces $1.5 Million Profit Following Satara Merger

EastPack Limited, New Zealand’s largest grower owned post harvest kiwifruit supplier, has announced a $1.5 million operating profit (after paying rebates) for the financial year ending 31 December 2013 – the first annual result since its merger with Satara.

EastPack Chairman Ray Sharp said although the operating profit was lower than the combined company had budgeted due to the unexpected lower tray numbers packed, overall he was pleased with the financial results.

“The end of year financial results show that following our March 2013 merger with Satara, which was the biggest merger in New Zealand’s kiwifruit history, it is clear that both residual companies are better off post-merger by around $3 million,” Mr Sharp said.


“While the merger was not without considerable one-off costs, had it not proceeded both companies would have operated at a loss for the 2013 financial year. The merger happened in the year that the kiwifruit industry fruit volume had shrunk to a low point as a result of the loss of Hort 16a Gold fruit production due to Psa and the continued conversion of Hayward production area to new varieties. EastPack’s objective was to rationalise overcapacity between the companies and pack the combined company’s fruit through the most efficient sites with the best plant and equipment,” Mr Sharp said.

He said further benefits of the merger will be achieved during the coming years as systems are further integrated and improved, better utilisation of assets is achieved with volume recovery, and further capital investment in improved plant and equipment. EastPack’s “Growing Excellence” LEAN manufacturing has reduced cost and waste by 28 percent during the past five years..

EastPack Highlights for 2013

• Packed 21.7m Class 1 trays in 2013 (EastPack and Satara combined)

• Net Profit of $4.958 million compared to $3.896 million in 2012

• $1.521 million operating profit after paying rebates

• Rebate to transactor shareholders of $3.945 million

• Final dividend of 5 cents gross per investor share. In addition to the 5 cents gross interim dividend declared in December 2013 and paid in January 2014

• EastPack paid out $2.572 million in dividends during the year ended 31 December 2013

• $3 million capital investment of “Invision photographic grading” at Katikati and Edgecumbe packhouses

• Industry leading Orchard Gate Return (OGR)


EastPack’s reputation for industry leading Orchard Gate Return (OGR) continued during the 2013 financial year. As at 1 March 2013, GREEN conventional OGR to growers averaged $5.38 per tray, GOLD $13.80 per tray and Green ORGANIC averaged $7.50 per tray. The average for G3/Sungold was $12.81 per tray, G9 $11.55 per tray and G14 was $10.46 per tray.

Mr Sharp said there were positive indications that the kiwifruit industry continues to evolve and recover from Psa and that confidence in the kiwifruit industry is on the rise.

“The general recovery of orchard values during the past 12 months has been spectacular, and this is leading to a renewed sense of optimism in the industry, as well as a lot of relief amongst growers! This is a clear signal that growers are willing to reinvest in their orchard assets,” he said.

“The knowledge that the kiwifruit category will be in short supply during the next three to five years has also influenced overall confidence in the industry. There is big excitement in the markets about G3 Sungold and other new varieties, and EastPack is well positioned to establish itself as a leader in new varieties.”

EastPack has a clear strategy for the year ahead to build on this renewed confidence and ensure that its grower shareholders benefit from continuous improvement, improved productivity, employee engagement and financial performance.

Mr Sharp said EastPack aims to pack 25 million trays this season; improve Green orchard productivity by 13 percent; achieve a $5 million profit after Rebate; and establish EastPack as a leader of new varieties. Reducing fruit loss will continue to be an area of great focus.

Establishing the newly-formed “NutriKiwi” brand as a category leader in Australia and other markets is also high on the list. EastPack’s joint venture with Opac, DMS and Trevelyan’s called “The Nutritious Kiwifruit Company”, announced in March 2014, will coordinate and market more than half of New Zealand’s Class 2 Green and 46 Count (excluding Zespri Class 1 volume) into Australia and other markets, with a focus on the well-known nutritional benefits of kiwifruit.

“EastPack is excited about this development as it is something that we have spoken about for many years in different forums and to finally get this up and running is a signal of the maturity which exists in the industry,” Mr Sharp said.

EastPack Chief Executive Tony Hawken said packing is well underway for the 2014 harvest at its packhouse operations in Te Puke, Edgecumbe, Opotiki, Katikati and Whangarei.

“The quality and quantity of Green Hayward this season is most encouraging and the new varieties are looking extremely promising - more promising than at the same time last year,” Mr Hawken said.


ENDS.


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