Satara Opts To Take Loss Now In Restructuring For The Future

News Release

For immediate release
March 14, 2011

Satara Opts To Take Loss Now In Restructuring For The Future

A season that saw a drop in trays packed and restructuring to reduce debt resulted in a $4.9 million full year loss for kiwifruit company Satara for the year ended December 31, 2010.

There were a number of non-recurring losses resulting from restructuring that have impacted an otherwise steady year. Without these non recurring items Ordinary Earnings of the business were profitable.

During the year leadership changed at Satara which is now run by Managing Director Tom Wilson. This has been accompanied by significant operational and cultural changes across the business.

Tom Wilson says there is still a lot to do to strengthen the business and his team is working through each facet of the operation.

“While a $4.9 million loss is not what any company wants to report, the underlying fundamentals of the business are strong; without the non-recurring items we would have made a small profit in a difficult year. But it is best to move these items out, take the hit now and position well for the coming year which looks to have a heavy crop.

“The forecasts for the coming season are for an increase of 1.1 million trays which will lead to full utilisation of the company’s facilities.”

The year saw a significant rationalisation programme get underway including the sale of Satara’s Totara Street, Mount Maunganui property has assisted reducing debt from $14.8 million to $7.7 million. This transaction generated a non-recurring accounting loss of $2.4 million. Company overhead costs reduced 21 percent as a result of restructuring and cost rationalisation. Revaluation of assets saw an increase in property values of $2.5 million.

Based on its 2010 supply, the company’s Transactor Shareholders received a total 20 cents made up of a 10 cent rebate and a 10 cent loyalty payment.

The Post Harvest Division handled 8.5 million Class 1 trays which was 23 percent fewer than the previous year. This reduction was due to lower yields and a net loss in the number of supplying hectares. This led to all of the company’s facilities operating below full capacity.

Satara’s Orchard Division generated 2.5 million Class 1 trays with an improved EBITDA compared to the previous year which had a throughput of a million more trays. The Orchard Gate Return per hectare continues to be strong.
The season produced the third consecutive year of record low Gold fruit loss and a continued improvement in Green fruit loss performance.

Managing Director Tom Wilson says the company has a close eye on the PSA bacteria (Pseudomonas syringae) which remains a risk to the industry in the medium to long term.

“But we have protocols in place and we are managing that risk across harvesting, transport, packhouse operations and coolstore handling.”

He says Satara has also introduced a new Grower Centric Business Model and greater engagement with growers which has already led to increased numbers of growers supplying the company and increased crop volume for 2011.
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