Seeka 1H profit falls on further banana business writedown
By Sophie Boot
Aug. 23 (BusinessDesk) - Seeka, New Zealand's biggest kiwifruit grower, posted a 6.5 percent decline in first-half profit despite revenue rising, as it wrote down the value of its banana-sourcing business further.
The Te Puke-based company reported profit of $10.4 million in the six months ended June 30, from $11 million in the same period a year earlier. Seeka said the bottom line included a $1.5 million writedown of goodwill to its tropical fruit business, Seeka Glassfields. Revenue rose 8.5 percent to $145.4 million, and earnings before interest, tax, depreciation and amortisation lifted 7 percent to $23.5 million.
Glassfields, which imports and ripens tropical fruit and provides a logistics service for retailers, suffered after a major customer sourced a direct supply of bananas in 2018, Seeka said. This pushed the board to reassess the value of the tropical business. Seeka had already written down the business by $2 million in 2017. It now recognises just $440,000 of goodwill for the business.
Seeka said it anticipates a better second half than in 2017, with a rebound in volumes of New Zealand kiwifruit production and stronger avocado volumes and earnings. It gave guidance for annual net profit to be between $6.5 million and $7.2 million, compared to 2017's $5.8 million, and ebitda of between $24 million and $25 million, from $23.1 million.
Still, it noted 2017's profit included a number of non-recurring negative adjustments, including the $2 million Glassfields writedown and a $1 million deferred tax adjustment.
Seeka said the first half saw increased kiwifruit crop volumes, up 21 percent on the previous year to 31.1 million tray equivalents handled, and record returns on avocados, delivering average return to growers of $40.81 per tray from $24.85 a year earlier. It also said its Delicious Nutritious Food Company, which manufactures 'Kiwi Crush' drinks, increased ebitda earnings to $400,000 in the first half, from $160,000 in 2017.
The board declared a 12 cents per share dividend, payable on Sept. 21 with a Sept. 14 record date.
Seeka's shares last traded at $6.40, and have dipped 0.8 percent this year.