Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Scales first-half profit falls on European apple price fall

Scales first-half profit falls on lower European apple prices, listing costs

By Suze Metherell

Aug. 29 (BusinessDesk) - Scales Corp, the listed fruit and vegetables logistics company, said first-half profit fell 22 percent from a year earlier, reflecting lower apple prices and the one-off costs of its NZX listing.

Profit was $20.6 million in the six months ended June 30, down from $26.4 million in the same period a year earlier, the Christchurch-based company said in a statement. Sales rose 3.4 percent to $150.2 million.

Scales debuted on the NZX in July at $1.60 per share. Of the $148 million worth of shares sold, $30 million was new capital to be used to reduce debt, while private equity firm Direct Capital sold into the offer, reducing their stake to 20 percent from 84.2 percent. Shares of Scales last traded at $1.53, and have fallen 4.4 percent below its offer price.

The company is New Zealand's largest apple exporter and also owns businesses across the primary sector, including sea and air freight services, cold store operations, and food ingredients, pet foods and juice concentrate businesses. Last year the company lifted annual profit 50 percent to $20.4 million, on the back of rising Asian demand for apples.

"We are continuing to develop our presence in Asia and other near markets, aided by the fact we expect premium variety apple plantings to yield increased volumes for 2015," said managing director Andy Borland. "Together with a group of other primary sector New Zealand exporters, we are establishing ServeCo, a collaborative venture based in Shanghai which is designed to assist the partners' trade into China."

The company is boosting its cold store network's capacity by 16 percent, building an 8,700 square metre Polarcold plant at the Ports of Auckland inter-modal freight hub at Wiri, South Auckland. Fonterra Cooperative Group had already signed on to use half of the space, Borland said, which is expected to be complete in the third quarter of next year.

Its horticulture segment, which includes its Mr Apple business, orchards, and fruit packing and storage businesses, increased sales 1.9 percent to $90.1 million in the six months, while operating earnings slipped 11 percent to $23 million. Scales blamed a drop in European apple prices for the decline, which it said was partially offset by higher volumes, with its Mr Apple final export volume 7 percent above forecast, and higher early season prices.

Storage and logistics increased sales by 4 percent to $61 million, while profit slipped 7.7 percent to $7.9 million. Sales in its food ingredients business rose 12 percent to $18.8 million, for a 3.4 percent gain in earnings of $2.8 million.

Improved operating cash flows meant Scales halved its forecast net working capital facility to $11.2 million, reducing forecast average prospective net debt to $38.2 million, below its prospectus forecast of $44.1 million, it said.

In its offer documents, Scales forecast net profit to fall to $15.9 million in 2014, before rising to $20.8 million in 2015.

"We have hit out targets and expect to remain on track to meet the prospectus guidance for the full-year result," said chairman Jon Mayson.

According to its prospectus, Scales expects to pay a dividend of between 9.4 cents per share and 9.6 cents per share, implying a gross dividend yield of 7.2 percent to 8.2 percent, for the 2014 financial year, and between 10.5 cents to 10.7 cents per share, for a gross yield of 8 percent to 9.1 percent, the following year.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

ICT Innovation: Six NZ Finalists In World Summit Awards

The awards are a global showcase of 40 projects, across eight categories, with a special emphasis on those which show the benefits of information and communication technology for the development of communities. New Zealand has finalists in six of the eight categories. More>>

ALSO:

Final Frontier: Rocket Lab And NASA Sign Commercial Space Launch Agreement

Rocket Lab has signed a Commercial Space Launch Act Agreement with the National Aeronautics and Space Administration (NASA). The agreement enables Rocket Lab to use NASA resources - including personnel, facilities and equipment - for launch and reentry efforts. More>>

ALSO:

Scoop Business: Wheeler Downplays Scope For ‘Large’ Rates Fall

Reserve Bank governor Graeme Wheeler says some market commentators are predicting further declines in interest rates that would only make sense for an economy in recession, although some easing is likely to be needed to maintain New Zealand’s economic growth. More>>

ALSO:

Ruataniwha Dam: Consent Conditions Could Mean Reduced Intensity

Legal advice sought by the Hawke’s Bay Regional Council on the Ruataniwha Dam consent conditions has confirmed that farmers who sign up to take water from the dam could be required to reduce the intensity of their farming operation to meet the catchment’s strict nitrogen limit. More>>

Health And Safety: Bill Now Sees Rules Relaxed For Small Businesses

Health and safety law reform sparked by the Pike River coalmine disaster has been reported back from the industrial relations select committee with weakened requirements on small businesses to appoint health and safety representatives and committees. More>>

ALSO:

Bearing Fruit: Annual Fruit Exports Hit $2 Billion For First Time

The value of fruit exported rose 20 percent (up $330 million) for the June 2015 year when compared with the year ended June 2014. Both higher prices and a greater quantity of exports (up 9.0 percent) contributed to the overall rise. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news