Seeka sinks into the red on orchard, goodwill write-downs

Monday 27th February 2012

Seeka Kiwifruit Industries, the grower which aborted a merger with rival Satara Cooperative last year, has sunk into the red after writing down the value of its orchards and goodwill as an Italian vine bacteria outbreak clouds the industry’s future.

The Te Puke-based company made a loss of $7.1 million, or 50 cents per share, in the 12 months ended Dec. 31. That compares to a $6.4 million profit, or 45 cents per share, in the nine months ended Dec. 31 2010 when it changed its balance date.

The bottom line was hit by a $9.7 million impairment charge on the value of its gold kiwifruit orchards, and an $8.8 million writedown in the value of its goodwill due to the Pseudomona Syringae pv actinadiae bacterium.

Earnings before interest, tax, depreciation and amortisation and fair value adjustments of $20.8 million was within the company’s December guidance. Its revenue was $137.1 million in the year.

“While some progress is being made, Psa V remains the cause of continuing uncertainty,” the company said in a statement. “The board is committed to maintaining a fiscally prudent approach with debt repayment a priority.”

The result comes the same day fruit marketer Turners & Growers wrote down the value of its orchards $20.9 million due to the bacteria, resulting in an annual loss of $18.9 million.

Seeka’s board didn’t declare a dividend, instead saying it will focus on repaying debt. As at Dec. 31, it had some $30.7 million of interest-bearing debt, down from $40 million a year earlier. Some $6.7 million of that debt comes due this calendar year.

The company has restructured its business in response to Psa, cutting 44 roles last year, and is working with orchard owners on the future of long-term lease assets, it said.

The shares, which trade infrequently, fell 2 percent to $1, valuing the company at $14.4 million by market capitalisation.

BusinessDesk.co.nz

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