Saturday, December 2, 2023

Less fat on meat income

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Scott Technology revenues have jumped in the last year but its automated equipment for meat processing plants played a lesser role.
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Revenue from meat processing work for the year ended August 31 was $34.5 million, down from $45m a year earlier, as total revenue from the world-wide activities rose to $225m from $181.8m.

Some of the bigger overseas projects have been challenging and while the operating earnings were higher, at $20m from $19.3m, the after-tax profit fell to $8.6m from $10.77m.

Dunedin-based Scott Tech warned of those challenges in early July and chairman Stuart McLauchlan and managing director Chris Hopkins said the projects are now nearing completion.

Appliances and the material handling and logistics sectors were the biggest revenue drivers in the latest year, ahead of meat and mining. 

Europe, North America and Australia/Pacific are the biggest sales regions with just $9.2m of sales in New Zealand.

A new business bought was Normaclass, which provides beef grading technology, with extensive installations in Europe and Uruguay.

During the year Scott Tech developed new technology in poultry and beef handling and for deboning lamb loins.

In recent years it has installed eight systems in NZ lamb plants, mainly in boning operations.

Hopkins estimates that capacity can process six to seven million lambs a year, about a third of the country’s annual throughput.

Automation takes more meat off the bone and more accurately. 

He thinks the benefit for the NZ economy is about $30m a year. The boost is about $2.50 to $3 a carcase.

“The meat yields have been the main focus of this work. There’s not a huge saving in labour.

“We’ve got a reasonably extensive spread into the NZ market and we’re seeing ongoing interest. Our systems are now at the stage they’re proven robust and reliable.”

Automation as a larger-scale labour-saver in the sector will happen, Hopkins said. 

The company’s automated systems aren’t on slaughter boards yet.

Scott Tech is heavily involved in automating beef processing systems but that is mainly in Australia, including a new boning project funded by the wider industry there, which could have a time-span of up to 10 years.

The company has said it is in the process of transferring its lamb processing technology knowledge to the pork, poultry and beef sectors.

Now 51%-owned by Brazilian group JBS, through its Australian subsidiary, Scott Tech was in a strong financial position at the August 31 balance date with shareholders’ funds of $112m out of total assets of $213m. Borrowing was $16.4m, just 8% of total assets.

After a busy period of acquisitions McLauchlan and Hopkins said the group will be cautious in its approach to protect cashflow and grow the bottom-line earnings. The forward order book continues to grow at a steady rate despite global economic uncertainty slowing the conversion of business inquiries to orders.

Scott Tech will pay a final dividend of 4c a share, making a total of 8c for the year.

Scott Technology is to receive $5.8m from the Provincial Growth Fund to set up  an automation solutions and service unit aimed mainly at supporting food processors, the Minister of Regional Economic Development Shane Jones said. The contract with the company would require the project to be New Zealand-specific and customer-led. 

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