Eastpack Lifts Performance With Fresh Investment

Eastpack Lifts Financial and Operational Performance to Back Fresh Investment

Bay of Plenty kiwifruit post harvest service provider, EastPack, intends to invest another $8.5 million on sophisticated new plant and automated equipment in 2010 to support higher volumes, continue to lift the quality of out-turns and deliver greater efficiencies.

The grower-owned company, which operates three sites in Te Puke, Edgecumbe and Opotiki, is set to report increased revenues, earnings and profitability to shareholders as well as higher fruit rebate payments and better than industry average orchard gate returns to its kiwifruit suppliers for the year ended December 31 2009.

“Our pre-audited results indicate that our performance is continuing to improve with lifts in earnings and profitability and gains in operational efficiencies from upgrading infrastructure, processes and capabilities,” Chairman Ray Sharp said. “This has provided grower investors and grower suppliers with confidence in the robustness and prospects for the business.”

The introduction of LEAN Manufacturing Excellence in 2009 greatly improved efficiencies and reduced waste with a 9 per cent reduction in total labour costs which was achieved through system and process improvements and not by reducing headcount.

Mr Sharp said that EastPack had a healthy balance sheet and very strong cash flows, enabling the latest capital improvements, including commissioning a six- lane sizer with soft bin tipping and automated packing capabilities for the Te Puke site, to be funded through retained earnings, depreciation and a small amount of bank debt.

“We have to compete for supply,” Mr Sharp said. “The high rate of capital spend will continue to ensure that the company has modern facilities that support efficient delivery of quality across all key processes and are adequate to meet the increased volumes we are targeting.”

In 2010 Eastpack, the single biggest supplier of gold kiwifruit, aims to handle 18 million plus trays of kiwifruit, up 14 per cent over the prior year with a 5 per cent surplus capacity to take advantage of handling opportunities for new varieties as they come on stream. In 2011 the company expects to grow overall volumes by another 10 percent.

Chief Executive, Tony Hawken said that EastPack was a strong supporter of ZESPRI International’s new varieties programme and intended to be in a position to be the leading post harvest supplier of new commercial varieties when they were released.

“We see our current industry structure with its integrated marketing and world leading research and development as being good not just for growers and the industry but also for New Zealand,” he said. “Our industry’s collaborative way of working together means New Zealand will continue to lead the kiwifruit category worldwide and our country will earn more from exporting an unmatched range of great tasting quality fruit.”

Mr Hawken said that EastPack was determined to continually build a reputation as a leader in innovation and quality by operating a world class orchard to market supply chain based on manufacturing excellence and LEAN manufacturing principles.

“We’re seeing the results on the bottom line with improved out- turns, reduced fruit loss, lower delivery costs and higher grower returns,” he said. “But we are also investing more in training and putting additional technical and field resources on to the orchards to help growers optimise their crop value and profitability by meeting the marketer’s specifications.”

Mr Hawken said EastPack was ready for the new picking, packing and shipping season and would be seeking to again lift the quality of its performance and returns while also staying alert to investment and expansion opportunities that would enhance profitability and shareholder returns.

ENDS

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