Scott Technology 1H profit jumps 70%; eyes German acquisition

Thursday 24th March 2016

Scott Technology, which is still awaiting approval to hand control over to Brazil's JBS, lifted first-half profit 70 percent as the recently acquired Machinery Automation and Robotics unit injected more revenue and the industrial automation firm looks to expand in Germany.

Net profit rose to $1.9 million, or 4.5 cents per share, in the six months ended Feb. 29 from $1.1 million, or 2.5 cents, a year earlier, the Dunedin-based company said in a statement. Revenue climbed 46 percent to $42.8 million, with Australasian sales climbing 72 percent.

"The company continues to experience a significant increase in the level of enquiry for automation and robotics across a wide range of industries and geographies, driven by the increase in global interest in the need to boost productivity and to reduce costs," chairman Stuart McLauchlan and managing director Chris Hopkins said. "Scott's order intake and forward work is at a record high and this is in part due to the expanded operations and is also part of the usual fluctuations that the company experiences as a result of providing large scale capital works."

Last year Scott investors backed a merger deal between the company and JBS Australia, giving the Brazilian company's subsidiary 50.1 percent ownership and injecting new capital. The deal has been held up by the Overseas Investment Office, which needs to sign it off before it can be ratified by the High Court. Approval hinges largely on the Kaikorai stream that passes through Scott's Dunedin property and is classified as reserve land under the city's proposed district plan.

Scott said it expects approval next month, having lodged its application in September last year.

The company's board declared an interim dividend of 4 cents per share, payable on April 12 with an April 8 record date, up from 2.5 cents a year earlier. The increased dividend would clear some of Scott's imputation credits ahead of the shareholder change and "reward shareholders for their patience."

Separately, Scott said it was in final negotiations to buy certain assets of a German engineering company that operates within Scott's appliance manufacturing sector, with a conditional agreement expected shortly.

"This acquisition, if it completes, will assist our planned strategic expansion through a stronger presence in our key international markets," the company said. "Current indications are that this business will have a solid forward workload and there will be further opportunities to expand the business to deliver and support Scott's engineered solutions into the European market."

Details are still being finalised, but Scott expects to employ 40 staff with an annual turnover of up to 8 million euros.

Scott's shares were unchanged at $1.40, just above the $1.39 price JBS is paying for control of the company.

(BusinessDesk)

BusinessDesk.co.nz

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