Scott says forward orders strong, Europe variable
By Gavin Evans
July 9 (BusinessDesk) - Industrial automation specialist Scott Technology says its forward order book remains strong despite restrained investment in Europe due to the ongoing uncertainty around Brexit.
The firm, which now has more staff in Europe than in New Zealand, says Australia, China and the US remain strong across its target industry sectors, and noted those markets still account for more than half its activities.
“In Europe we are seeing more variability as many customers restrain capital expenditure seeking direction from the impact of the global trade and the impact of Brexit is better understood.”
Shares in Dunedin-based Scott rose as much 7 percent to $2.37. They were recently unchanged at $2.20 and down 20 percent so far this year.
Scott, half-owned by Brazilian meat processor JBS, has expanded rapidly through acquisition in the past five years.
It gets about a quarter of its revenue from meat processing and last month completed the acquisition of French technology company Normaclass to expand its digital camera technology and gain new sales channels in France and Uruguay.
The firm also provides automation systems, robotics and process machinery for the appliances, industrial automation, mining and materials handling sectors.
During the 2018 financial year it acquired Belgian industrial automation specialist Alvey Group and North Carolina-based automated guided vehicle manufacturer Transbotics. In January it acquired the spares and sundries business of Milmeq Meat Slaughter.
In April, the company reported a 65 percent lift in first-half revenue to $111.4 million, with net profit up 62 percent at $5.07 million despite delays to one major meat sector contract and challenges to two mining projects in Australasia.
Today the company said those project issues have had an impact in the current half-year but will be “fully resolved” before the start of the next financial year.
Investment in new facilities in North Carolina, Perth, Melbourne and Dunedin had also had an impact on operations but would set the firm up well for its next phase of growth from 2020.
“Revenues from recently acquired businesses are currently tracking ahead of expectations in America and slightly behind in Europe,” chairman Stuart McLauchlan and managing director Chris Hopkins said in a joint statement.
“We expect the overall growth in group revenues in the current fiscal year will be driven by the acquisitions with revenues from the ‘existing’ part of the business held back due to the level of development work and by the effect of the projects noted in the prior paragraph.”
The pair said the firm had spent considerable time and resources integrating businesses acquired in recent years and is moving closer to operating as a single ‘one Scott’ business.
The firm continues to develop new technologies in its core sectors and transfer that technology and experience throughout the business. Its extensive development of software and technology – including virtual and augmented reality to enhance machine connectivity, smart operation and remote monitoring and diagnostics - will also drive future value for the business.
“Much of the expenditure has been expensed, although the board is considering the best way to account for, and recognise, the company’s extensive, world-leading, intellectual property portfolio.”