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Friday 28th October 2011 |
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Seeka Kiwifruit Industries, the country’s biggest kiwifruit grower, is forecasting lower earnings from fruit as the Pseudomona Syringae pv actinidiae bacteria ravages more kiwifruit orchards.
Net profit before tax, non-recurring items, fair value adjustments and asset revaluations, is expected to be in the range of $10.6 million to $11.6 million in the year to Dec. 31, 2011, down from $12.9 million in the nine months to Dec. 31, 2010.
Lower fruit returns account for the majority of the difference between periods. The company reported an $18.8 million profit in the six months to June 30, 2011.
Still, the Te Puke-based company expects to comply with all banking covenants at Dec. 31, 2011. It is cutting costs because the virus is reducing revenue and is selling surplus assets to reduce debt.
"The outbreak of Pseudomona Syringae pv actinidiae (PSA-V) has become widespread throughout the Bay of Plenty, and is considered to be a fundamental threat to the New Zealand Kiwifruit Industry," the company said in a statement to NZX today.
The company did not forecast a profit after asset revaluations.
Earnings before interest, tax, depreciation, fair value adjustments and asset revaluations will be between $18.5 million and $19.5 million in the 2011 year compared to $19.9 million in the nine months to Dec. 31, 2010, it said.
PSA-V has been detected on a total 341 gold orchard hectares out of a total area of gold Seeka supplying orchards of 517 hectares.
It has also been detected on approximately 428 green hectares of a total of green Seeka supplying orchards of 2130 hectares. Secondary symptoms have been detected on both green and gold orchards.
Zespri held an urgent meeting with 500 growers in Tauranga yesterday, Television New Zealand reported.
Seeka also said it has identified PSA-V on nine orchards, comprising 89 gold hectares and 22 green hectares, leased under long-term lease arrangements.
An adjustment was made to reduce the value of land and building assets by $7.6 million in the June 30 2011 first-half accounts in accordance with international financial reporting standards (IFRS) requirements.
Seeka leases its orchards so it is not affected by a drop in orchard land values. Its processing assets are expected to reduce in value, reflecting lower revenue and the value of the crop on long-term leased orchards will also fall.
The company said that prior to any year-end revaluation adjustment due to the impact of PSA-V its long-term leased orchards would be expected to have a carrying value of $8.5 million excluding the value of crop on the vine.
Any reduction to the biological asset value will not impact on the company's cashflow.
The value of the crop on long-term lease orchards would normally be approximately $3.5 million at December.
This represents the cost of growing the crop on the vine to that date, and is normally added to the value of biological assets provided there was a reasonable expectation that it would be recovered at the time of harvest.
So far 41 roles have been restructured at a cost of $600,000 in the current year.
BusinessDesk.co.nz
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