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Thursday 20 January 2022

Scales upgrades FY guidance after solid H1

25th August 2021 By Bridget O'Connell | | @foodtickernz

Apple exporter Scales Corporation has signalled it is on track to come in strong at the full year after delivering a solid first half, which saw underlying net profit rise by 15.4%.

The Christchurch-based company, which spans horticulture, logistics and food ingredients, posted underlying net profit after tax of $33.3m in the six months to the end of June 2021.

Underlying EBITDA was up 11% to $54.8m during the period “despite the challenges faced by each of our divisions,” according to chair Tim Goodacre.

On the back of what it called an “exceptional” first half performance given the market challenges, the company upgraded its full-year guidance range, with underlying net profit now expected to be between $32m and $37m, implying an underlying EBITDA of between $65m and $72m.

It had previously signalled underlying net profit would be between $27.5m and $33.5m, implying an underlying EBITDA of between $46.5m and $53.5m

“We continue to anticipate disruptions to domestic and international operations including labour availability, global markets and supply chains due to the ripple effects of Covid-19,” Goodacre said.

“This can be evidenced by the current lockdown in New Zealand. However, we believe our diversified focus will go some way to mitigate these issues.”

Looking at the first half performance by division, the group’s horticulture business delivered an underlying EBITDA of $38m, up 2.9% from the same time last year.

It said its own grown Mr Apple export volumes were forecast to be 3.6 million tray carton equivalents, a dip from 3.9 million in the first half of last year, with this year’s season marred by labour shortages and supply chain disruption.

“Volumes were affected by inclement weather in the key growing season,” chief executive Andy Borland said.

“However, higher pricing offset these lower volumes as well as the increased labour and shipping costs that were incurred.”

The firm’s food ingredients division saw underlying EBITDA of $16.1m – a substantial jump from $11.0m last year which Borland chalked up to “the sustained global demand for petfood”, with the division experiencing a 30% increase in volumes sold compared to the first half of 2020.

“Whilst Covid-19 continued to impact the Australasian supply chain, [US pet food ingredient processor joint venture] Shelby benefitted from its domestic customer base, supporting our geographical diversification strategy.”

Logistics delivered an underlying EBITDA of $2.7m, down from $3.6m in 2020.

“The strategic value of Scales Logistics is significant,” Borland said.

“During a period of global supply chain issues, together with a domestic shortage of refrigerated containers, Scales Logistics ensured all its horticulture customers were able to ship their 2021 harvests. This expertise provides a significant strategic advantage to the group.”



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