Kiwifruit rival sells shares

Dissatisfaction with its direction and performance are cited as the reasons kiwifruit company DMS has sold its shareholding in rival company Seeka.

Seeka's strong focus on other produce internationally, such as bananas, cherries and stone fruit through its recent $25 million expenditure in Australia, are among the reasons for the sale.


Photo: File.

DMS's four per cent of shares have been bought by Sumifru Singapore – a company primarily involved in bananas and pineapples in Asia – which bought a small shareholding in Seeka in January this year.

Seeka's chief executive Michael Franks says Sumifru's purchase of further shares is a vote of confidence in the company.

"We welcome Sumifru increasing their shareholding,” says Michael.

'It's a fantastic vote of confidence in the company having an international blue-chip company like Sumifru increasing their stake in Seeka. It provides liquidity to the stock and adds value to all shareholders.”

Seeka this month reported a six-month net profit after tax of $3.72 million – up 152 per cent on the corresponding period in 2014.

The company forecast its full-year net profit after tax will be up by between 30 and 40 per cent on the $3.17 million reported for full year 2014.

Michael says Seeka is delivering on its goal of becoming a premium produce company for its growers and shareholders.

But it's a strategy that is obviously at odds with what DMS expects.

'We have concerns about this international strategy,” says DMS director Craig Greenlees, 'and its potential competition against New Zealand-grown kiwifruit in the key markets of Australia and Asia.”

Of even greater concern is the lack of all-round performance in Seeka's core business – New Zealand kiwifruit – including its high level of fruit loss as an example of its lack of focus, he says.

'We take fruit quality extremely seriously,” adds Craig.

'If a grower has as much fruit as possible picked, packed and exported as ‘Class 1', they will achieve the greatest profit and the post-harvest operator will also do well. Seeka appears to have lost sight of this.”

Funds from the sale of Seeka shares will be used to continue the DMS programme of investment in new coolstores, required to service its increasing market share.

'Achieving high quality results is an absolute non-negotiable for DMS as it means greater profits for New Zealand kiwifruit growers,” he says.

'Our concerns with Seeka's performance, along with their potential competition against New Zealand kiwifruit sold in Australia and Asia, means we did not believe that it was appropriate for us to hold shares in Seeka any longer.”

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