Revenue Boost Drives Strong Scales Performance

Revenue Boost Drives Strong Scales Performance

Apple volumes and prices yield 50% profit growth

Christchurch-based Scales Corporation, the agribusiness group with operations in horticulture, storage and logistics and food ingredients, has increased its after tax profit by 50 per cent to $20.4 million in the year to 31 December 2013.

Total revenue has increased 17.2 per cent on 2012 to $278.1 million, with higher apple volumes and prices the single largest contributor while EBITDA is up by 34.4% to $44.4 million.

Scales managing director Andy Borland says 2013 has been a strong year for the business with good performances from all three divisions.

“The diverse spread of activities gives Scales broad exposure to the New Zealand agribusiness sector which is growing at a very good rate,” Borland says. “Opportunities are spread across the full spectrum of our divisions.”

Borland highlights a number of promising factors.

“We are increasing apple volumes targeted at premium Asian markets via a maturing orchard redevelopment programme that includes new redder, sweeter varieties more suited to palates in those countries.

“Nationally there are higher dairy, meat and crop volumes that require cold storage. This situation is expected to continue on the back of continuing improvement in farm productivity and the increasing areas of farm land, particularly in the South Island, becoming part of community irrigation schemes.

“Our food ingredients activities add value to core industry by-products to meet growing demand in global pet food and beverage industries,” Borland says. “All these activities need sea and freight logistics support, be they import or export related.”

Horticulture
Scales subsidiary Mr Apple’s crop produced a record 2.82 million cartons packed and exported from the company’s orchards. More than four million cartons in total were exported including apples from external growers, a further record.

Borland says apple prices were strong in most of the company’s key markets which more than offset the impact of “a persistently high” New Zealand dollar.

Storage & logistics
Scales’ cold storage operations at Polarcold (South Island) and Whakatu Coldstores (North Island) both met expectations. They continue to expand their footprint and secure longer term contracts, Borland says.

Negotiations are underway for a new South Auckland facility that if successfully concluded will see a new rail-side facility completed by mid-2015.

Bulk liquid storage business Liqueo continues to expand with a new 2000 tonne tank commissioned at Port of Napier and a new boiler at Timaru producing heating efficiencies.

Sea freight operations under Scales Logistics had a strong year, Borland says, with increased volumes securing competitive freight rates that helped net orchard gate returns for Mr Apple and a growing number of New Zealand apple exporters using the company’s services.

New air freight division Balance Cargo completed its inaugural year securing a number of important new export clients and overall growing its client base.

Food ingredients
Scales’ Meateor pet food operations maintained good momentum with raw material imports from Australia helping performance.

Fruit juice concentrate business Profruit processed record volumes of apples with kiwifruit volumes on the up.

Demerger
Scales initiative to demerge its investment assets into a separate entity, George H Investments Limited, was completed on 30 April. This will enable Scales to focus on the growth and development of its three core trading divisions.

Ends

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