EastPack Delivers Much Improved Result

Media Statement
25 March 2009

EastPack Delivers Much Improved Result and Commits to Further Capital Investment

Bay of Plenty kiwifruit post harvest operator, EastPack has delivered a much improved financial result for the year ended 31 December 2008 with significant growth in earnings and profitability and gains in operational efficiencies as a result of ongoing investment in upgrading infrastructure, processes and capabilities at our three sites.

Net profit before rebate and tax was $7.3 million, up from $3.8 million the prior year. Rebates of 20 cents per tray supplied, amounting to a total of $3.0 million, were returned to shareholders. This left a net profit before tax of $4.3 million, up $3.1 million on 2007. Net profit after tax amounted to $3.2 million, a more acceptable level of profitability than the prior year NPAT of $1.2 million.

The increase in profitability was generated by 19% growth in year on year operating revenues to $56.2 million, based on a total of 15.7 million trays submitted, 2 million more trays than the previous year and a creditable lift in EBITDA to $11.2 million from $6.7 million.

“The result should go some way in providing investor shareholders with confidence in the robustness of the business and its future prospects,” Chairman of the grower owned company, Ray Sharp said. “While we are pleased to be able to deliver this credible financial result, the company remains firmly focused on strengthening the platform for progress by further improving profitability and, of course, providing satisfactory OGR returns to grower suppliers.”

Directors have recommended a final dividend of seven cents per investor share to be paid on 31 March 2009 in addition to the six cents per share interim dividend paid in January. This brings the gross dividend to shareholders for the year to 13 cents per share, compared with 6 cents in 2007.

Mr Sharp said $1.2 million would be retained to help fund a planned $7.5 million of capital improvements in 2009 at EastPack sites in Opotiki, Edgecumbe and Te Puke on top of $8.8 million spent on capital improvements in 2008 to extend capacity and automate part of the packing process.

“Our ongoing investment in essential infrastructure is in line with our strategy to improve quality, efficiencies and capabilities to lift profitability to shareholders – and continue to deliver upper quartile orchard gate returns to grower suppliers

“We believe this is the right decision to ensure that EastPack is a sustainable, profitable business into the future,” he said. “We know that these are nervous times not only because of the global market situation and deteriorating investment climate but also the cost of doing business has been rising. EastPack has to compete for supply. A point of difference is to continually build on our reputation for improving out- turns and reducing fruit loss by consistently delivering quality GREEN and GOLD Kiwifruit efficiently to meet the marketer’s specifications.“

Mr Sharp said the high rate of capital spend reflected the business strategy of ensuring that the company has modern facilities that support efficient delivery of quality and are adequate to meet the production targets set in 2009 of between 16.5-17.0 million trays, a modest increase over 2008.

CEO Tony Hawken said that EastPack was implementing LEAN manufacturing systems to further lift quality and minimise fruit loss after a mixed operational result in 2008 but was in good shape to take on what was expected to be a challenging 2009 selling season given the size of the New Zealand crop and the current state of the global economy and consumer confidence.

“While EastPack is insulated from some of the negative impacts of the recession, our priority is on reducing costs, increasing quality across those processes within the supply and delivery chain we can control and helping growers meet product specifications as far as possible,” he said. “But we think EastPack is well placed for the future and on track to continue to grow through improving our operational performance, generating good returns on investment to our shareholders and delivering high OGR to our growers.”

For company information go to: www.eastpack.co.nz

EastPack performance SUMMARY
For the year ended December 31 2008

ENDS

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