Turners & Growers expects up to $19m loss
Fruit and vege firm Turners & Growers expects to make a full-year after-tax loss of between $16 million and $19m after writedowns to its kiwifruit, lemon and apple orchards.
That result would be on a par with last year's $18.9m loss for the 12 months ending December 31 - also following orchard writedowns.
Chief executive Geoff Hipkins said it was too early to quantify the scale of writedowns, as it was still in the process of valuing its assets.
The value of its lemon orchards in particular would be hit due to an oversupply of lemons and the unsuitability of some varieties for export.
The company would also book writedowns on its PSA-affected kiwifruit orchards and some apple orchards, reflecting the tough domestic market and land writedowns.
It was also revaluing some land and buildings, and there would be a small writedown for some glasshouses in its Status Produce tomato business, Hipkins said.
"Taking all that together we're anticipating we'll have to make a reasonable writedown, but the positive is it doesn't affect the cash operating position of the company, which is still pretty good.
"Even though the domestic market is under a fair bit of pressure, we've certainly had a very good year particularly as far as our apple exports are concerned. Prices have been strong in all of our offshore markets."
Turners & Growers had been hit by fluctuating fruit and vege prices domestically - particularly tomato and banana prices.
Tomato prices had reached $10 a kilogram due to a supply squeeze out of Australia but as supply loosened prices had fallen to just shy of $3 a kg.
"We are at seasonally low prices for tomatoes."
Demand for bananas had been relatively flat, but supply had swelled as Phillippine bananas banned from China were diverted to New Zealand.
"It's stabilised a little in the last month or so but there was some very aggressive retail pricing."
T&G is 73 per cent owned by German firm Baywa, after the Overseas Investment Office approved Baywa's takeover offer for the company in March.
The OIO recently queried a management restructure at T&G. Baywa had stated in its application that it had no plans to make any material management changes and that it intended to run T&G for the first nine months largely as it had been run.
Hipkins said it had replied to the OIO. "From our point of view there are no issues of compliance."
The company had restructured, including trimming the number of direct reports to Hipkins from 13 to seven, but media reports that the company had been gutted of experience were incorrect, he said.
"We have added a significant amount of expertise with our new appointments and we've rationalised our structure with the aim of increasing operational efficiency. That's a standard and normal process a company goes through."
It was incorrect to say 16 of 20 executives had or would be displaced, as the company was still working through the restructure, Hipkins said.
T&G's shares are currently priced at $1.56 on the NZX, and have not been traded today.