Seeka Limited Analysis

Overview

Seeka is an integrated horticultural and produce company that grows, processes, distributes and markets high quality produce to world markets. An international business based in New Zealand focused on orchard-to-market excellence.

Seeka's core business is kiwifruit and it is a key supplier of New Zealand fruit to the global kiwifruit trade, via marketer Zespri, with around 21% market share. Seeka has invested capital to increase supply and processing capabilities as the industry anticipates growth with new gold kiwifruit variety.

Seeka continues to expand its product portfolio and capture value in emerging markets such as avocados while growing its geographical reach - now operating in Australia and Northland in addition to the Hawkes Bay, Bay of Plenty and the Coromandel. Seeka has a dominant market share with its Australian grown kiwifruit being supplied to local and export markets and nashi supplied to the local market.

Seeka provides an investment entry point to New Zealand kiwifruit and avocados and is poised for further growth.

Performance

The following information was extracted from Seeka Limited's Half Year results, released on 22 August 2024:

Listed New Zealand produce company Seeka [NZX:SEK], reports its unaudited interim results for the six months ended 30 June 2024.

• $284.2m Revenue — up 34% on six months to June 2023 previous corresponding period (pcp)
• $68.4m EBITDA — up 88% on pcp
• $45.0m NPBT — up 230% on pcp
• Forecast full year NPBT updated to be between $17m to $21m — up from ($21m) loss FY23

"Seeka has lifted its financial performance following increased kiwifruit volumes in New Zealand and Australia," says Seeka chief executive Michael Franks.

"Net profit before tax is up 230% to $45 million for the six months to June 2024, with Seeka handling 44% more kiwifruit in New Zealand. Earnings before interest, tax, depreciation and amortisation was up 88% to $68 million, with net profit after tax up 63% to $17 million, after a $14 million one-off deferred tax expense from changes in tax legislation for tax deductibility of buildings.

"Following two challenging seasons, kiwifruit volumes have rebounded with Seeka handling a record 43 million class 1 trays for New Zealand growers. Fruit quality is excellent, and international market demand remains strong.

"Along with its post-harvest business, Seeka also grows and sells fruit in New Zealand and Australia. In New Zealand, our orcharding business grew 17 million trays, a 53% increase on 2023, and production from our Australian kiwifruit orchards was up 164%.

"Along with the 34% lift in revenues to $284 million, Seeka restructured in 2023 to create a leaner organisation and implemented innovative cost saving mechanisms, including a captive insurance structure.

"Net bank debt of $171 million is down $6 million on June 2023. The company continues to focus on debt management with $53 million received in July 2024.