Iconic fruit and veg producer, NZX-listed T&G, could be flicked off by troubled German parent

Thursday, 5 December 2024

T&G Global has had a difficult few years thanks to Cyclone Gabrielle and it may make it more of a target for divestment as BayWa struggles.

German agricultural, construction and energy concern BayWa AG has announced changes to its business that could see it hive off its majority interest in NZX-listed T&G Global.

T&G told the NZX this afternoon that it was in frame along with global parts of the business for changes, but “this is a process being led by BayWa and relates to its business and shareholdings.

“It is therefore not appropriate for T&G to comment on their position. We continue to work closely with BayWa and our Board to maximise value for all shareholders.”

Bloomberg said today BayWa intended to cut one in six jobs in Germany at the “ailing” agricultural and building materials group, with around 1300 of 8000 German jobs to be gone by 2027, most of those in Munich.

T&G Global’s top-selling export brands include Jazz apples.

But the company also wanted to give up 26 unprofitable locations out of 400 worldwide; it makes most of its money outside Germany. It employs 25,000 people globally in a variety of holdings, including New Zealand’s currently loss-making T&G, but also Dutch soy and grain trader Cefetra and Al Dahra BayWa, which grows and distributes tomatoes in Abu Dhabi, among many others.

Bloomberg reported that under the aegis of long-standing CEO Klaus Josef Lutz, BayWa had grown into a global group and had accumulated a mountain of debt of more than 5 billion euros through acquisitions and investments. After Lutz's departure, the company found itself in a liquidity crisis in the summer after interest rates rose and the core business came to a standstill.

Owners and banks have already injected around 1 billion euros in capital and bridging loans into BayWa to keep it liquid. Baur intended to secure further financing until 2027 by the end of the year.

'BayWa AG's strong position in stable, socially relevant key markets and the trust of its financing partners enable it to restructure independently,' the press release stated. A restructuring expert had certified that the company was fundamentally viable. A capital increase is also planned for next year, as BayWa announced at the weekend.

A new report finds major failing in Hawke's Bay emergency repsonse as Cyclone Gabrielle hit the region.

But it may not be enough to allow the company to retain its offshore assets including T&G.

Turners and Growers, as it was originally known, was established more than 125 years ago as an Auckland-based fruit auction business. In 1974, the company became the first to charter a plane to export kiwifruit to Europe; it was first to export squash and onions to Japan as well as being the first to import California grapes and stonefruit among many other pioneering moves for New Zealand horticulture.

At the time BayWa took majority control of the company in 2012, it was selling $1b worth of produce each year. Then-managing director Jeff Wesley said the takeover would have “significant benefits for New Zealand’s fresh produce industries”, given BayWa’s scale and market access, particularly across Europe.

T&G had a poor annual result in February. While revenue had come in $30m higher to comprise a total of $1.33 billion, the company reported a post-tax loss of $45.6m, largely as a result of the continuing fallout of Cyclone Gabrielle. But it was a steep decline from the previous year’s $900,000 loss.