Saturday, April 20, 2024

Scales picks up and grows on after damage

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Hopes for an easier year ahead after Gabrielle took a bite out of apple business.
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Cyclone Gabrielle blew a hole in the revenue and earnings of listed primary sector company Scales Corporation through its Hawke’s Bay Mr Apple division, one of the largest producers in New Zealand.

Mr Apple’s own-grown exports were down by 18% in volume to 2.7 million tray carton equivalents (TCEs) – but revenue was down by 8% because of higher prices.

In calendar 2023, also the financial year, the horticultural division contributed $14.8m underlying earnings before interest, tax, depreciation, and amortisation, compared with $17m in 2022.

New chair Mike Petersen, a farming leader from Hawke’s Bay, said Scales is expecting a more normal year of trading in 2024, particularly for horticulture.

“I have been impressed by the tenacity and resilience of the Scales teams.

“I am also delighted to advise that the board has reappointed Andy Borland for a further five years as managing director, as his contribution to the company has been significant.”

For Scales as a whole, underlying net profit after tax was $38.4m, down 17%, and reported NPAT was down 35% to $24.7m.

Revenue was down 9% to $565m.

Total capital expenditure was $17m, of which $7m was spent in regrafting and replanting cyclone-damaged orchards.

The global proteins division, connected mainly with bulk exports for pet foods, had a 7% reduction in volume and a 10% reduction in underlying earnings.

Petfood ingredient customers returned to lower, pre-covid inventory levels, resulting in lower volumes sold.

The directors’ guidance for 2024 is an underlying net profit between $47m and $55m and the current policy is to pay 50-75% to shareholders.

From FY23’s profits, an initial instalment of 4.25c a share was paid in January and a second instalment will be reviewed and advised in early May.

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