Scales lifts first-half profit 3% on record Mr Apple crop, raises annual outlook

Thursday 25th August 2016

Scales Corp lifted first-half profit 3 percent and raised guidance for annual earnings as its Mr Apple unit delivered a record crop and met its 2020 export volume target four years early.

Net profit rose to $33.8 million, or 24 cents per share, in the six months ended June 30 from $32.8 million, or 23.5 cents, a year earlier, the Christchurch-based company said in a statement. Revenue jumped 30 percent to $209.5 million, while earnings before interest, tax, depreciation and amortisation increased 3 percent to $54.2 million. That performance was underpinned by Scales' Mr Apple unit, with apple exports up 12 percent to a record 3.55 million TCEs (tray carton equivalents).

"This is an excellent achievement from the entire Scales team and especially the Mr Apple team, which has delivered another record crop on existing resources and infrastructure," managing director Andy Borland said. "Mr Apple has packed a record 3.55 million TCEs, which is 12 percent above 2015 export volumes and meets a 2020 volume target four years ahead of schedule."

New Zealand's biggest apple exporter doubled its annual profit in 2015, selling higher value products to key markets in Asia and the Middle East, beating the forecast in its 2014 prospectus. In December, Scales said that result wasn't likely to be repeated, predicting a more ordinary harvest for 2016, an absence of insurance proceeds from a hailstorm last year and some provisioning for reduced use of its coldstore network.

Scales today said it expects ebitda of between $55 million and $62 million in the calendar year, up from a previous forecast of $48 million to $55 million. Net profit is expected to be between $29.6 million and $34.6 million.

The company's horticulture unit increased profit 4.7 percent to $36 million on a 39 percent jump in revenue to $130.7 million, while its food ingredients business boosted sales 38 percent to $31.1 million for a 36 percent gain in profit tot $4.6 million.

The storage and logistics division boosted external revenue 6 percent to $47.4 million, while profit slipped 12 percent to $9.2 million. Borland said its new Auckland coldstore was trading profitably and ahead of expectations though "industry headwinds" weighed on earnings and it was expected to deliver an annual result in line with 2015.

Scales' board will consider an interim dividend payment later in the calendar year, with its policy to split returns evenly and pay them in January and July.

The shares last traded at $3.50 and have climbed 46 percent this year, outpacing a 15 percent increase on the S&P/NZX All Index over the same period.

BusinessDesk.co.nz

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