Seeka EBITDA surged 192.9% but tax distortion masked a PBT-to-NPAT gap

The improvement reflects the normalisation of kiwifruit volumes after an industry-wide shortfall in FY23, with post-harvest operations — the dominant segment at 59.9% of revenue — lifting its segment result from NZ$43.8m to NZ$84.5m. NPAT recovered to NZ$8.8m from a NZ$14.5m loss, but the NZ$20.9m gap between PBT and NPAT reflects a -70.5% effective tax rate that is well outside Seeka's historical range of -14.3% to 32.7% (three-period mean 16.5%); PBT is the cleaner read on operating performance this period. Gross borrowings fell NZ$37.3m to NZ$140.3m, cutting net debt/EBITDA from 6.6x to 1.8x.

The -70.5% effective tax rate produced a NZ$20.9m boost to NPAT relative to the statutory rate, creating an 81.1 percentage-point gap between PBT growth of 241.6% and NPAT growth of 160.5%. The composition of this tax benefit — whether deferred tax asset recognition, loss utilisation, or a one-off credit — is not explained in the excerpts and is not likely to recur at the same magnitude, which means reported NPAT overstates underlying earnings this period.

Cash conversion is exceptionally strong but warrants scrutiny. OCF/EBITDA of 86.8% is above Annolyse's historical range for Seeka (three-period mean 39.7%, range 10.3%–82.4%), generating NZ$47.7m in pre-lease free cash flow. Working-capital released NZ$5.1m, though this is at the upper edge of the historical release range (average NZ$13.2m release), meaning the tailwind was smaller than in prior upcycles. The exceptional OCF outcome appears partly driven by the earnings uplift itself rather than a structural working-capital benefit, and the prior-period conversion of just 10.3% means the year-on-year uplift is as much about base effects as operational improvement.

Leverage has reset to a multi-year low. Net debt/EBITDA of 1.8x is at the lower edge of Seeka's historical range (mean 3.6x), restoring financial flexibility after the FY23 stress. This unlocks dividend capacity: a 5 cents per share final dividend is declared for April 2025, and a 10 cents per share dividend was already paid in January 2025, resuming distributions after FY23's suspension. The full-year dividend total and its payout ratio relative to sustainable earnings rather than one period's NPAT will matter for assessing policy durability.

No forward earnings guidance is provided for FY25, and the company has offered limited explicit forward-work visibility in the release.

Second-half earnings shape is worth noting: the H1 FY24 NPAT of NZ$10.5m implies a H2 NPAT loss of approximately NZ$1.7m, which reflects the seasonal nature of the kiwifruit business but also suggests underlying second-half earnings remain modest. The FY24 recovery is substantially a volume-recovery event; the question for FY25 is whether industry volumes hold and whether margins at current EBITDA levels of 18.5% — at the upper edge of Seeka's historical range but below the historical maximum of 21.8% — are sustainable without a further step-up.

The 18.5% EBITDA margin is at the upper edge of Seeka's historical range (three-period mean 14.6%), which implies limited further margin expansion from current volume levels and some risk of mean reversion if industry supply increases or prices moderate. PBT of NZ$29.7m and the 7.2% PBT margin (historical mean 2.0%) are the most honest measures of operating performance given the tax distortion.

• Pre-lease FCF of NZ$47.7m is well above the historical mean of NZ$6.8m and reflects the genuine earnings uplift plus reduced capex intensity (4.4% of revenue vs 7.6% prior year).
• The -70.5% effective tax rate adds approximately NZ$20.9m to reported NPAT that is not grounded in current operating performance and should not be extrapolated.
• Leverage reduction is real and cash-flow-supported, which improves balance-sheet quality regardless of the tax line.

This briefing cannot assess the sustainability of the kiwifruit volume recovery, future industry supply dynamics, or the likelihood of the tax benefit recurring.