Record Results For Scales Corporation

13 November 2009

Primary sector exporter and servicing group Scales Corporation increased net earnings by 80 per cent in the financial year ended 30 June 2009 to $13.6 million from $7.5 million the previous year.

Total revenues rose by $24.5 million to $212.5 million and earnings before interest, tax, depreciation and amortization rose 40 per cent from $25.2 million to $35.2 million.

Commenting on the outstanding performance Chairman Allan Hubbard says all components of the group contributed in spite of the challenging economic conditions encountered from the ongoing global financial crisis and adverse movements of international exchange rates.

“This was an excellent result with solid contributions across the group but particularly so in the coldstorage and pet food ingredient business’s. This is a tribute to the enthusiasm and ability of management and staff across the group who have now achieved a threefold increase in net earnings over three years.”

Scales Corporation is one of New Zealand’s oldest and most respected companies, formed in 1912 as a shipping service for the wool industry. Today it maintains a shipping agency and logistics function for the general export/import trade as well as to service the group’s own needs. Other activities include the supply of protein to petfood manufacturers Mars and Nestlé, temperature controlled cool and cold stores and logistics, industrial parks, bulk liquid storage and processing, insurance, and “Mr Apple” the country’s largest apple grower and exporter accounting for approximately 20 per cent of NZ’s export apple crop.

Chief Executive Officer Andy Borland says the group benefited from the recent purchase of the Silverstream Industrial Park near Mosgiel which is 85 per cent leased and higher dairy and horticulture production that led to increased usage of temperature controlled storage operated by Polarcold and Whakatu Coldstores.

A change in distribution patterns by leading food brands in pursuit of further efficiencies also increased cool and cold store usage.

Meateor, the group’s petfood ingredient processing business, enjoyed an excellent year with good volumes of product exported to the United States.

Looking forward, Mr Borland says it will be difficult to maintain the trend in net earnings that has seen net profit after tax increase 141 per cent since the 2007 financial year.

“Scales, with its diverse portfolio of businesses, is well positioned to prosper and create further shareholder wealth notwithstanding any adverse cyclical events and instability in local or global events that may occur.

“The Group’s product and service offering is at the top of the range for their respective peer grouping and pricing can be adjusted in some instances to offset volatility in key operating parameters.”

The Group is looking forward to a ruling by the World Trade Organisation in January 2010 that may require Australia to remove its 88 year old ban on apple imports from New Zealand.

No provision has been made in the current year’s financial forecasts for a lifting of the ban which, if approved by the WTO, may take effect for the 2012 apple harvest.

Scales Corporation is public unlisted company with 554 shareholders. Interests associated with Allan Hubbard, including Southbury Group, are the largest shareholders with an 80 per cent holding.

At 30 June 2009, Scales Corporation had total assets (supported by recent valuations) of $302.9 million, up from $195.2 million in 2005. These are located in Napier, Hastings, Central Hawkes Bay, Christchurch, Timaru, Dunedin and Mosgiel.

Scales Corporation employs some 200 permanent employees with a further 1500 seasonal workers required to harvest and pack the 3 million cartons of apples exported by Mr Apple.

ENDS

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