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Turners & Growers FY profit drops 34% on tax expense

Turners & Growers FY profit drops 34% on tax expense as sales edge higher

Feb. 28 (BusinessDesk) – Turners & Growers Ltd., the fruit and vegetable exporter controlled by Guinness Peat Group, posted a 34% drop in full-year profit after a tax expense that wiped out growth in operating earnings.

Net income in calendar 2010 fell to $6.3 million, or 4.4 cents a share, from $9.5 million, or 7.62 cents, a year earlier, the Auckland-based company said in a statement. Sales rose 1.6% to $599 million. The latest results include a building depreciation tax expense of $5.1 million that wasn’t in the year-earlier figures and a $3.4 million write-down in the value of its 50%-owned Inglis Horticulture.

The shares have climbed about 13% this year, as investors ponder the likely timing of a sell-down by Guinness Peat of its 66% holding, in line with its plan to sell assets and return funds to shareholders. The company’s biggest source of revenue is exports, which fell 5.3% in 2010 in the face of a strong local currency, as domestic sales and processing sales rose.

“Exporting from New Zealand continued to be a challenge due to the high New Zealand dollar against most major currencies,” chairman Tony Gibbs said in the statement. Apple exporters are “going through a tough time with a number of growers struggling to break even,” and 2011 “looks to be another difficult year” for apple exports, he said.

The shares fell 0.6% to $1.68 on the NZX today.

Export revenue fell to $304 million from $321 million a year earlier, producing an operating profit of $5.3 million, down from $7.4 million in 2009.
Domestic sales rose to $180.6 million from $171 million, lifting earnings to $10.6 million from $9.2 million.

Fruit and vegetable processing sales rose to $44.5 million from $39.3 million and earnings fell to $86,000 from $777,000. Sales from its growing operations fell to $45 million from $46.9 million, for an operating profit of $4.2 million, up from $2.9 million.

The company will make a payment of 6 cents a share via its profit distribution plan, which offers bonus shares and a facility to sell them.
Gibbs said the company is upbeat overall for 2011.

“Early signs are that most business units are trading well and the Board is confident that 2011 will produce improved results,” he said.


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