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Saturday 21 May 2022

Pet food pushes Scales net profit up 39%

24th February 2022 By Bridget O'Connell | | @foodtickernz

Diversified agribusiness group Scales Corporation has delivered at the top end of its upgraded guidance, posting a 39% jump in net profit to $36.9m with its ingredients division outperforming.

Scales’ food ingredients division includes Meateor, which process and markets pet food and ingredients from NZ, Australia and the US.

In its full-year results to December 2021 reported today, the group’s underlying EBITDA rose 15% to $73.8m, boosted by a 52% hike in earnings from food ingredients, which hit $35.1m as demand for pet food soared.

“This was an outstanding performance by Food Ingredients, causing it to easily exceed its long-run EBITDA target of $25m,” chief executive Andy Borland said.

“Volumes of pet food ingredients sold increased by 29% compared to FY20, reflecting a sustained growth in the global and domestic pet food market.”

He added that increased volumes were processed by recently acquired subsidiary Shelby Foods in part due to the commissioning of a new plate freezing facility in the Dodge City, Kansas, premises.

“The division continues to take advantage of its diversified geographical and protein supplies, which reduced the impact of Covid-19 on global supply chains,” Borland said, with more growth in the pipeline.

“Food Ingredients has identified a number of growth opportunities and its divisional chief executive, John Sainsbury, expects to relocate to the USA this year to progress a number of those.”

The company’s horticulture division, which included apple growing, packing and marketing business Mr Apple, as well as Fern Ridge Produce, held its ground “given the significant market uncertainty and logistics challenges”.

EBITDA was $39.1m, just down on last year’s $40.8m.

During the period, Mr Apple commenced its multi-year packhouse automation project at Whakatu, as well as continuing the redevelopment of its orchards.

Scales smaller logistics division delivered underlying EBITDA of $4.9m, an increase of 17%.

“The strategic value of Scales Logistics was once again apparent, with the business successfully navigating a challenging and complex international supply network on behalf of its customers,” Borland said.

“Financially, it generated a strong full year result despite being impacted by global logistics pressures and increased costs.”

During the year Scales declared dividends of 19 cents a share, with a final dividend to come in May, followed by payment in July.



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