Financing growth at SPC Ardmona

GE Commercial Finance is working with Australia's largest producer of packaged fruit and vegetables, SPC Ardmona, to introduce an innovative quality sorting solution for canned fruit to the local market.

SPC Ardmona recently signed a $10 million operating lease through GE's Equipment Finance division to purchase the US-developed Odenberg optical sorting system, which automatically detects defects in production line fruit to improve yields and reduce wastage.

With national brands like SPC, Ardmona, Goulburn Valley, Taylors, IXL and SPC Nature's Finest, SPC Ardmona is one of only two companies in the world to use the Odenberg system for sorting peaches, and the first in the world to use it for sorting pears, giving it a strong competitive advantage and setting the foundation for expansion into new product lines. SPC Ardmona processes more than 42,000 ts of pears and 40,000 ts of peaches annually.

To grow our business we had to significantly improve the yields of our quality produce by reducing wastage and better managing the 4000 staff, including seasonal workers who we employ on a regular basis, says Steve Perkins, chief financial officer, SPC Ardmona. To do that we needed to improve our sorting facilities, and that meant finding innovative solutions to the problem of wastage through manual sorting.

Because we're the first Australian company to use the technology, we had to find a finance company that not only understood the product in the context of our business, but could also give us flexibility in the loan to optimise cash flow, says Perkins.

GE is an international company and leases similar equipment to fruit processors around the world. GE was able to put together a lease on this type of equipment because, with its manufacturing division and its expert asset group, GE Commercial Finance has the tools to assess the equipment's true value and wear the residual risk. This is their unique advantage and competitive edge.

GE Commercial Finance has pre-approved the $10 million facility, with the first draw of $2.8 million occurring in April.

We've taken the time to understand SPC Ardmona's immediate challenges and used our global expertise to assess the contribution the new equipment will make to expanding its business, says Kerri Thompson, managing director, Equipment Finance, GE Commercial Finance.

We take a long-term view of the business and are able to structure flexible finance packages that equip our customers for future growth without limiting their ability to innovate and lead in their own markets.

Perkins says the new equipment will help the company retain and gain new private label contracts and continues the investment Coca-Cola Amatil is making in quality consumer products since purchasing SPC Ardmona in 2005.

Although we have signed an operating lease, the focus was not so much on CapEx and balance sheets but rather on better cash management given the seasonal nature of the produce and the inventories we keep as a result, says Perkins. We're also experimenting with putting other fruits through the system, which could mean the release of new product lines in the near future.