T&G Global CEO Gareth Edgecombe says the CY19 results show the company's underlying performance is showing improvement despite a difficult operating environment.
The results showed progress on its three-year roadmap and the continued transition of the company for stronger growth and improved financial returns, he said. Consumers demand for healthier foods and the premiumisation of global produce meant T&G sits on "significant potential".
The company’s operating profit was $16.5 million, compared to $15.6 million in 2018, while profit for the year was $6.6 million, compared to $8.3 million in 2018. Net group assets were $474.4 million, compared to $413.6 million in 2018. Revenue was maintained at $1.2 billion
Edgecombe said: “Our operating profit for the year increased to $16.5 million, compared to $15.6 million in 2018. This increase came despite incurring $7.1 million in costs relating to the reorganisation of our business, strategic transactional activities and the Holidays Act remediation.
“While a number of factors adversely impacted the overall financial result, the underlying performance of the organisation is showing improvement.
“Our International Produce division had a strong close to the year, increasing revenue by 14 per cent, to $305.1 million, largely driven by our Asian trading business boosting revenue by $40.6 million.”
He said the company has an increased focus on premium apple varieties, so the re-planting of some orchards was vital but had a cost impact.
“This, combined with weather challenges and an oversupply of commodity apple varieties in the European market, impacted our Apples revenue. Strong sales in North America and the UK partly offset this, resulting in a one per cent decline in revenue for our Apples division, to $656.9 million.”
In the US, a bolstered sales and marketing effort as well as an integrated activation program saw accelerated growth in premium apple brands, including a 43 per cent increase in Envy apple variety sales.
Edgecombe said freeing up capital to reinvest in growth was central to T&G’s strategy. It sold its Mt Wellington site for $65 million. “This sale and the uplift in the site’s value, combined with an increase in the fair value of other T&G properties, contributed to an increase in net assets, from $413.6 million in 2018 to $474.4 million in 2019.”
The company also announced its planned acquisition of the New Zealand domestic fresh produce division of Freshmax New Zealand, subject to Commerce Commission approval. It would expand and strengthen T&G’s presence in New Zealand and deliver better services to growers and customers (Food & Drink Business, 14/02/2020).
“Looking to the year ahead, we will focus on delivering improved shareholder returns by harnessing our vertical model strengths, from genetics and growing, through to sales and marketing, to strengthen our existing categories and develop our emerging categories of blueberries and grapes.
“To unleash our full potential, our business has to evolve. In 2019, our team put in a lot of hard work to turn around our business, and while we have some way to go until we’re delivering to our full financial potential, it’s pleasing to see the green shoots coming through,” Edgecombe said.
