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2007 AGM Presentation Turners

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Title: 2007 AGM Presentation Turners


1
2007 AGM PresentationTurners Growers
  • Jeff Wesley

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The Strategic Environment - Revisited
  • In New Zealand and most developed Western
    countries
  • the fresh produce strategic environment is
    characterised by
  • 60-90 of fresh produce distribution going
    through supermarket chains.
  • Frequent over supply conditions of commodity
    products resulting in price destruction when
    supply exceeds demand by small volumes
  • Frequent long term price erosion of those
    commodities at a time when growing costs are
    increasing significantly. Changing now?
  • Returns to growers often below their cost of
    production
  • Efforts by growers to decommoditise their
    offerings
  • Increasing rationalisation of the grower base
    into a few large growers of commodities and
    multiple niche operators.

5
The Major Business Units on 1 Jan 2006
  • Fresh Domestic (inc imports)
  • Enza International
  • Status Produce
  • Enza Foods Ltd
  • Fruitmark Australia
  • Turners Transport
  • Fruit Case Co
  • Floramax
  • Major Investments
  • WWF- UK (50 owned),
  • Oppenheimer Group USA (15 owned),
  • Enzafruit Continent (100 owned)
  • Inglis Horticulture (40m) (50owned)

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Fresh Domestic (inc imports)
  • What Does it Do?
  • NZs largest domestic supplier of fresh produce
    to Supermarkets, Grocery independents and
    Foodservice trade.
  • Major importer Bonita bananas, citrus, grapes,
    Australian vegetables, tomatoes, tropical and
    Pacific Island produce. Even snow peas from
    Zambia.
  • Domestic operations (13 sites) involved in
    procurement, warehousing, coolstorage, ripening
    and marketing.
  • Prepack operations in Pukekohe, Tauranga,
    Christchurch.
  • Exclusive marketing arrangements with many major
    grower groups.
  • What Happened in 2006?
  • Record number of units sold. Usual
    under/over supply conditions prevailed
  • Revenue up 2.0. Operating expenses reduced
    3
  • EBIT up 19.6
  • SAP (new computer system) implemented in
    Domestic.
  • First significant increase in banana prices
    since 2001.
  • Prospects for 2007 Beyond?
  • Currently performing well. May YTD revenue
    is up 5.0 on last year.

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Enza International
  • What Does it Do?
  • NZs largest exporter of pipfruit to world
    markets (48 countries)
  • NZ export crop by variety 2006 Braeburn 40.6,
    Royal Gala 35.6, Fuji 6.6
  • NZ export crop went to (2006) EU 41.5, UK
    23.4, Asia 15.2, US/Can 16.7,
  • Originally a sole NZ exporter, Enza now competes
    with multiple NZ exporters.
  • Owns and operates 2 packhouses (Whakatu
    Nelson) major Coolstores.
  • Has own proprietary varieties it grows
    worldwide. (Pacific Series, Jazz, T22 etc)
  • Now has a 50/50 JV with Inglis family to grow up
    to 1m cartons of new varieties
  • What happened in 2006?
  • Better market conditions than the
    catastrophe year of 2005.
  • Total export crop drops 16.3 to 14.9m
    cartons, lowest level since 2001. Industry still
    relying on commodity variety apples for next 5
    years.
  • Enza market share expands first time since
    deregulation to 35 (from 30)
  • Revenue up 24.7 on 2005 EBIT up 22.5 on
    2005
  • Prospects for 2007 Beyond?
  • Export crop expected to be marginally up on
    2006 to approx 15.5m cartons
  • NZ Jazz exports double to 380k cartons.
    500k from Northern Hemisphere in 2007.
  • Enza Jazz volumes to reach 6m cartons in
    2011 up from 880k cartons today.
  • Excellent prospects going forward as Jazz
    and new Enza variety T22 volume builds.
  • Introduced Enza Domestic to local market.
  • Successfully commenced export of Enza
    branded kiwifruit to EU from Chile.
  • Asia in 2008 Exchange rate remains a
    significant concern

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Status
  • What Does it Do?
  • Status is NZs largest glasshouse (20.4ha in 3
    sites) grower of loose, truss and specialty
    tomatoes. In 2006 produced over 10,000MT
  • It is the major category supplier of tomatoes to
    the Foodstuffs group.
  • It operates a large packhouse in Mangere packing
    mandarins, lemons etc.
  • It is a major exporter of tomatoes to Japan and
    Asia/Australia.
  • What happened in 2006?
  • The year was characterised by record low
    tomato prices at the beginning and end of the
    year with near record high prices through mid
    year.
  • Our strategy to change our product mix to
    more high value specialty tomatoes and less
    commodity varieties particularly over the summer
    months has been successful.
  • The Japanese export programme while
    marginally smaller ran successfully
  • Revenue up 8.2 on 2005.
  • EBIT up 28.5 on 2005.
  • Prospects for 2007 Beyond?
  • Increasing energy and labour costs remain a
    significant concern.
  • Strong start to the year with improved retail
    prices.
  • May YTD revenue is up 8.2

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Enza Foods NZ Ltd
  • What Does it Do?
  • Processes 70-100,000MT apples/annum into Apple
    Juice Concentrate (AJC) products.
  • Products include clear, cloudy, decolourised,
    de-ionised, aroma, organic
  • Produces diced/sliced/pureed apple into pouch
    packs and single serve packs.
  • Processes 25,000MT of carrots, kiwifruit, pears,
    boysenberries, blackcurrants into concentrate
  • Imports AJC from China for further processing
    and resale.
  • Exports AJC and associated products to Japan,
    USA, Australia etc.
  • Uses EFL proprietary technology to produce pouch
    packs for international Food Service industry.
  • What happened in 2006?
  • Revenue up 21.6 An aggressive inventory
    reduction programme released 10m cash.
  • The rapidly strengthening NZ depressed
    returns together with lower processed volumes.
    EBIT down 21.
  • Prospects for 2007 Beyond?
  • Good. World AJC prices are rising (now
    US7/gallon and going up) with mid term to long
    demand likely to outstrip supply. As more low
    grade apples are exported from NZ processing
    volumes are declining. Technology being
    introduced to harvest surplus apples. Business
    unit looks very good at 100,000MT processed
  • China expected to change from major AJC
    exporter to net importer in 10-15 years
  • Satisfactory year expected with 2008 looking
    better.
  • Recent Management Changes implemented.
  • Innovative products to be launched in next 2
    years.

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World Apple Juice Concentrate Prices
Source Foodnews Publications and EFL market
intelligence network, juicemarket .co.uk
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Enza Apple harvesting Technology now in use
26
FruitMark Australia
  • What Does it Do?
  • Historically was a major supplier of AJC to
    Australian market (75 market share in early
    1990s, now only 10 due to low price Chinese AJC
    competition)
  • Major importer and supplier of Frozen
    concentrated orange juice (FCOJ) and cranberry
    juice.
  • Major importer and supplier of dehydrated
    products (sun dried tomatoes, semi-dried
    tomatoes, strawberries etc) and frozen products
    (blueberries, strawberries, boysenberries, rasp)
  • Major supplier of fresh cut produce to
    Foodservice industry in Victoria and Queensland.
  • What happened in 2006?
  • Revenue up 34 on 2005.
  • EBIT up 23 on 2005.
  • Prospects for 2007 Beyond?
  • Extremely well run business with significant
    growth and expansion prospects
  • Several exciting new projects being
    investigated.
  • May YTD revenue up 37.5

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Turners Transport
  • What Does it Do?
  • NZs largest chilled transportation co dedicated
    to the fresh produce ind
  • Transports at controlled temperature fresh
    produce from the farm/orchard to market. 45 of
    business directly related to TG. Rest
    independent.
  • Operates 40 trucks and 35 trailers for line haul
    24 hours/7 days. 10 others short haul vehicles.
  • Traveled 4.8million km in 2006, up 9 on 2005.
  • What happened in 2006?
  • Introduced 8 state of the art multi
    compartment Swiss Masters trucks/trailers.
  • Most advanced chilled distribution
    transportation available (only ones in NZ)
  • Revenue up 7.7
  • EBIT up 23.1
  • Introduced trial GPS tracking systems for
    improved efficiency and management.
  • Prospects for 2007 Beyond?
  • Gains using GPS are being made in operational
    efficiencies with improved reporting accuracy of
    departure/arrival times, unscheduled down time
    and road speed.
  • Market share growth is also continuing.
    Expansion/acquisition projects being
    investigated

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Fruit Case Company (FCC)
  • What Does it Do?
  • NZs largest domestic supplier of returnable
    plastic crates, pallets and bins to the fresh
    produce industry.
  • Washes 13 million crates/annum for
    hygiene/appearance.
  • Issues approx 1 million pallet turn arounds per
    annum
  • What happened in 2006?
  • Revenue up 3
  • EBIT up 32
  • Introduced deep nesting 47L crate reducing
    freight costs by 50
  • Significant logistical and process
    improvements.
  • Prospects for 2007 Beyond?
  • Further development and introduction of new
    design crates, pallets, bins
  • Revenue growth expected but concern about
    increasing fuel costs.
  • May YTD revenue up 6

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Exports Diversified
  • What Does it Do?
  • NZs largest supplier of fresh produce to the
    Pacific Islands inc French Polynesia, New
    Caledonia, Fiji, Samoa, Tonga etc.
  • Excluding kiwifruit and Enza all other export
    business has now been transferred to the groups
    new majority owned company Delica Ltd.
  • What happened in 2006?
  • While revenue declined 33 the unit produced
    a very satisfactory result with a 519k
    turnaround in its EBIT result.
  • Credit management was strengthened,
    management changed and more profitable
    business pursued.
  • Prospects for 2007 Beyond?
  • On track to make a satisfactory EBIT in 2007
    with significant opportunity to expand revenue
    via kiwifruit exports to Australia in next 1-3
    years.

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Floramax
  • What Does It Do?
  • New Zealands largest seller by auction of fresh
    floral products in the domestic market to
    wholesalers, commission buyers and florists
  • New Zealands largest importer of tropical
    flowers from Singapore, Malaysia, Thailand,
    India and other Asian markets.
  • Provides total administrative and logistical
    services to key wholesalers
  • What happened in 2006?
  • Revenue down 12
  • EBIT up 15.3
  • Record volume of stems sold in excess of
    50 million.
  • Record volume sales of roses for Valentines
    day.
  • Prospects for 2007 Beyond?
  • Revenue up 5 May YTD.
  • Increased imports of tropical product from
    Singapore and Thailand.
  • New venture importing roses from India
    proceeding well.
  • Investigation into opportunities for JV
    flower auction in Queensland.

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Major Investments
  • What Do They Do?
  • 1. World Wide Fruit Co UK 50 JV with UK
    grower group. JW is Chairman
  • Major fresh produce supplier to major UK
    supermarkets. Category managers for pipfruit,
    kiwifruit, stone fruit, avocadoes and dates.
    Operates pack house and coolstores and small
    truck fleet in UK. 110m turnover
  • 2. Oppenheimer Group North America 15
    shareholding. JW is one of 3 directors. US356m
    turnover.
  • Major fresh produce supplier to major NAM
    supermarkets.
  • Category managers for pipfruit, grapes,
    kiwifruit, tomatoes, stone fruit, pineapple,
    tropicals, berries, avocadoes peppers.
  • In 14th straight year of growth.
  • 3. Minor investments inc Fresh Veg Packers,
    Fruit Ventures etc.
  • What happened in 2006?
  • Combined dividends from these and our minor
    investments increased 8 over 2005.
  • Prospects for 2007 Beyond?
  • Both Oppenheimer and WWF are investing in new
    revenue streams. Enza will co-operate with
    Oppenheimer Group in Chile. Dividends are
    expected to grow steadily.

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Recent Initiatives
  • Delica Ltd. (70 TG owned)
  • Delica Group was a very successful NZ diversified
    exporter with operations in NZ, Australia and
    Peru. In April 2007 TG entered into a JV with
    Delica to create the largest diversified produce
    exporter in Australasia.
  • Kapiro Orchards, Kerikeri (100 owned)
  • Effective today TG has purchased the assets of
    Kapiro Orchards, one of the largest mandarin and
    kiwifruit orchards in New Zealand. The 122 ha
    orchard produces in excess of 1,000MT of
    mandarins and 200,000 trays of kiwifruit
    annually.
  • Kiwifruit - New Varieties
  • Enza currently has proprietary rights to world
    class apple varieties (Jazz, T22 etc ) which it
    grows under license in Southern and Northern
    Hemisphere countries. In line with this strategy
    TG has recently secured the world wide
    propagation and marketing rights to several new
    unique kiwifruit varieties that it is now
    beginning to grow under license in both Northern
    and Southern Hemisphere countries.
  • Enza Owned Orchards Hawkes Bay (100 owned)
  • In early 2007 Enza acquired 2 Hawkes Bay apple
    orchards totaling 81.3ha of which 66ha is
    planted. It is planned over time to convert the
    commodity varieties on these orchards to high
    value varieties including Jazz and T22. 25,000
    this year
  • Other
  • Your Management and Board are pursuing other
    interesting developments coming from the ongoing
    rationalisation and reinvestment happening in the
    fresh produce sector in NZ and worldwide. New
    announcements can be expected.

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The First Ever Shipment of Enza Kiwifruit to
Australia
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The Future
  • The future is bright and it will see
  • The company taking further steps to become
    vertically integrated
  • (grower, packer, shipper, marketer) in
    profitable categories in the
  • domestic market as it has already done with
    Status Tomatoes.
  • The company expanding its global focus to grow
    proprietary and
  • other key fruit categories including kiwifruit
    in overseas countries for
  • international distribution as it has already
    done with Jazz.
  • Further streamlining of corporate overheads.
  • Every operating division improving its
    performance
  • (and maybe some new ones)

Thank You.
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