Scales first-half profit rises 61% as Mr Apple beats expectations; annual guidance affirmed

Thursday 27th August 2015

Scales Corp, the country's biggest apple exporter, posted a 61 percent gain in first-half profit as its Mr Apple unit performed better than expected, and affirmed guidance for stronger annual earnings.

Net profit climbed to $32.2 million, or 23.8 cents per share, in the six months ended June 30, from $20.6 million, or 17.3 cents, a year earlier, the Christchurch based company said in a statement. Earnings before interest, tax, depreciation and amortisation climbed 47 percent to $52.4 million on a 7.3 percent gain in sales to $161.2 million.

Scales' horticulture unit, which includes the Mr Apple business, boosted earnings 52 percent to $35 million on a 4 percent gain in revenue to $93.7 million.

"The result reflects the strong performance across all divisions, and particularly the vertically integrated Mr Apple business, which exceeded expectations across its operations, from orchards, packhouses, cool storage and export marketing," chief executive Andy Borland said. "Looking ahead, Scales is well-positioned to benefit form expected increases in annual apple crops, improving FX rates, increased cold storage space, and improving utilisation and efficiency in our bulk liquid storage business."

Scales' food ingredients business lifted first-half sales 20 percent to $22.6 million for a 23 percent gain in segment profit to $3.4 million, while its storage and logistics segment increased sales 8.8 percent to $44.7 million for a 33 percent boost in earnings to $10.5 million.

Earlier this month Scales upgraded its annual earnings guidance based on the strong performance of the horticulture unit, saying Ebitda is expected to be 25 percent to 35 percent higher than its prospectus forecast for $41.2 million in calendar 2015, implying earnings of between $51.5 million and $55.6 million for the year. The company today affirmed that guidance.

The board will consider an interim dividend payment later in the year, with the company's policy to evenly split the half- and full-year returns, paying them in January and July.

The shares last traded at $1.98, and have climbed 38 percent this year. The stock listed in July last year at an offer price of $1.60.

BusinessDesk.co.nz

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