Highlights – 6 months to 30 June 2020 (1H20)Privileged that all divisions were deemed essential businesses throughout the lockdown alert levels.Continued to run the business across all sites during times of peak harvest and production.Underlying NPAT[1] of $29.2 million (1H19: $30.1 million).Underlying EBITDA[2] of $44.4 million (1H19: $47.3 million).Record Mr Apple export volumes of 3.9 million TCEs[3].Food Ingredients benefitted from increased pet food demand during lockdown.
Diversified agribusiness group Scales Corporation Limited (NZX:SCL) today reported its 1H20 results. NPAT for the Group
was $27.8 million (1H19: $121.8 million), a solid result during the midst of a global pandemic.
Scales Corporation Chair Tim Goodacre noted: “Trading throughout the COVID-19 lockdown was not without its challenges.
However, the continuity of the business and the ensuing results were made possible by strong leadership together with
the courage and hard work of team members.”
“Whilst the divisional mix of our earnings differs from prior years, the diversified geographical and operational nature
of our business, together with our vertically integrated business structure, undoubtedly assisted us to achieve the
returns noted.”Divisions
The Horticulture division delivered an Underlying EBITDA of $32.4 million (1H19: $41.3 million), together with a
record-equalling crop of 5.1 million TCEs and record export volumes of 3.9 million TCEs. Managing Director Andy Borland
commented: “COVID-19 lockdowns occurred during the peak harvest and production period for the Horticulture division.
Whilst we maintained strong sales into our European markets, sales to Asia and near markets were unfortunately adversely
affected by changes in logistics and customer purchasing patterns. As a result, a lower percentage of crop was sold by
30 June 2020 compared to previous years and we experienced price pressure in Asia markets in particular. However, we
believe our strategy to operate in diversified geographical markets with a range of both premium and traditional apple
varieties provided us with a strong base to deliver the current period result.”
The Food Ingredients division delivered an excellent first half result with Underlying EBITDA of $11.0 million (1H19:
$5.1 million). Mr Borland said: “A change in customer purchasing behaviour due to COVID-19 brought orders forward in the
first six months of the year, with a resulting 14 per cent increase in volumes sold compared to 1H19. In particular,
Shelby was able to take advantage of trading opportunities in the USA, supporting our strategy of geographical and
protein diversification.”
Logistics traded in line with 1H19, with an Underlying EBITDA of $3.2 million (1H19: $3.1 million). The division
benefitted from exposure to the agribusiness sector.Outlook
Mr Goodacre noted “We continue to anticipate that our full year Underlying Net Profit will be at the bottom end of our
previously advised guidance range of between $30.0 million and $36.0 million[4], taking into account the impact that COVID-19 has had, and continues to have, on each of our businesses. However, our
balance sheet remains strong and we continue to seek appropriate investment opportunities.”
Scales dividend policy is for interim and final dividends to be split approximately evenly and paid in January and July.
Scales remains committed to its current annual dividend level of no less than 19 cents cash per share whilst the company
holds Net Cash.
About Scales Corporation
Scales Corporation is a diversified agribusiness portfolio. It comprises three operating divisions: Horticulture, Food
Ingredients and Logistics. The company’s diverse spread of activities gives Scales broad exposure to the agribusiness
sector. Scales Corporation was founded in 1897 as a shipping business by George Herbert Scales. Today it has operations
across New Zealand, Australia and the USA. Find out more at www.scalescorporation.co.nz.