Lower first half loss by Grocorp

Press, 28 January 1988, Page 27

Lower first half loss by Grocorp

PA Wellington A legacy of high development costs has caused Grocorp Pacific to post another interim loss of $139,000 ($159,000 loss previously) in the six months ended October 31. Turnover more than doubled to $1,349,000 ($468,000) and the pre-tax loss was $107,000 ($139,000). No tax was paid in either period. The share of losses in associate company, Tangible Investments, Ltd, was $32,000 (nil). There were no extraordinaries this period ($20,000). Revenue came from the 1987 kiwifruit crop and from orchard management contracts at Kerikeri and Te Puke. The directors said that operating costs of maturing orchards at Kerikeri and Twyford, in Hawke’s Bay, had been brought to account as expenses rather than being capitalised. These expenses would be offset by earnings in the second half of the year, they said. One of the company’s major strengths was that it was not too dependent on any one crop, directors said. The company was encouraged by a dramatic improvement in stonefruit returns during the current period. The diversification into the production of squash was also providing strong returns. As reported, returns to growers from the 1987 kiwifruit crop would be the lowest for many years. This was because of a combination of the unrealistic value of the New Zealand dollar, the 60 per cent increase in crop volume in 1987, and a lack of discipline in export marketing, directors said. All of these factors should improve in 1 OSSSO, resulting in a possible industry payout of $8 or more a tray. “There are grounds for optimism that our kfwifruit production in 1988-89 should make contribution comparable with the earnings from our other

crops,” said Grocorp’s chairman, Mr Richard Yates. “The most significant event during the halfyear, and one which promises great benefits to the company and indeed to New Zealand horticulture generally, was the formation in September of Sanzig Ventures, a joint venture between NZI Life, Nitto Tochi Tatemono Company, and Grocorp Pacific,” Mr Yates said. It had been formed to buy horticulture land for development in crops aimed mainly at export markets. All orchards developed or acquired by Sanzig would be managed under contract by Grocorp, which will retain 20 per cent ownership of the properties. Grocorp had sold three Hawke’s Bay orchards to Sanzig for a gross return Of $4.4M. Two were planted in apples and the third in nashi, cherries, and apples. Sanzig had also bought another apple orchard from a third party, taking its total holdings in Hawke’s Bay to more than 220 ha. The profitable sale of the three orchards had significantly reduced holding costs, particularly interest charges, Mr Yates said. It was the directors’ aim to reduce these further, as well as to achieve improved cash flows through orchard management and other horticultural activities.