Turners & Growers Ltd is predicting a soft second half trading environment as consumers buy lower value food after reporting an increased interim profit.
The fruit and vegetable marketer reported profit before tax of $13.2 million in the six months to June 30, up from $8.2m in the same period last year.
The interim profit after tax was $8.7m, up from $5.6m last year. There was no interim dividend. Revenue rose 22.3 percent to $304.6m.
The company said a one-off gain of $7.8m from the purchase of Kerifresh Ltd was partly offset by a one off writedown of $4.2m on an investment in Worldwide Fruit (UK) Ltd.
Excluding extraordinary items, the profit before tax was $1.4m ahead of the same period in 2007.
Prices for fresh fruit and produce have been strong but consumers are spending less on fruit and vegetables during the economic downturn.
Turners Transport has also been affected by fuel price hikes and the volume of goods transported has dropped.
"As a result this division is behind last year and we are currently re-organising the business to counter the changing business conditions," chairman Tony Gibbs said.
The fresh flower industry has been slower this year with weaker consumer demand.
The contributions from ENZA Pipfruit, including the coolstores and packhouses operation, were down from last year and the business will export the lowest volume since the industry was deregulated.
"The main reason for this is reduced volume due mainly to significant summer frosts, especially in the Hawke's Bay region." The recent export ban on New Zealand tomatoes may also result in excess domestic product in the summer months, which could destroy prices.
Turners & Growers is now a very large mandarin, orange, lemon and kiwifruit grower after purchasing Kerifresh Group in March.
"While we ultimately believe the investments will contribute adequate returns we have a substantial amount of work ahead of us to turn these businesses around and make them profitable," Mr Gibbs said.
Commenting on the outlook, the company said a strong domestic market and weakening New Zealand dollar were positives that had to be countered against the challenges in transport, flower, tomato and pipfruit business.
"At this time of year it is difficult to predict the year-end result with certainty.
"The New Zealand domestic economy has slowed and this is reflected in the food purchasing behaviour of the nation with consumers buying less high value fresh food lines.
"Turners and Growers is not immune to this down turn," Mr Gibbs said.
