Friday, March 29, 2024

Scales packs another record crop

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Scales Corporation has packed another record crop of apples and lifted its full-year earnings guidance.
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The listed company’s Mr Apple subsidiary had so far sold about two-thirds of the 3.55 million cartons picked on its orchards.

Of those cartons, 1.66m were in the new premium varieties such as NZ Queen and Pink Lady and the 1.88m cartons of traditional varieties also included high-colour Royal Gala which had again been a stand-out market performer, managing director Andy Borland said.

Though the growing Asian markets were more challenging this year than last, they had taken up the extra volumes of fruit.

Mr Apple had already reached the production target set for 2020 and in the next couple of years expected an even-split of premium/traditional production as new planting areas started producing.

Premium variety volumes were up 14% on the previous year.

An after-tax profit of $33.8 million was reported for the six months ended June 30, up from $32.78m at the corresponding time last year.

The volume growth led to Scales now expecting operating earnings (Ebitda) for the December 31 year to be in the $55m to $62m range, after initial forecasts in the $48m to $55m range.

At the top end of the new figures, it would match last year’s $61.4m.

Last year’s Ebitda had been so strong, including a good hail insurance payout, that the directors had been careful not to get carried away in this year’s budgeting, Borland said.

“We like to be realistic and we have a big crop and strong markets so if we can match last year without a hail payout that would be pretty good.”

All-up, Mr Apple would export about 5.26 million cartons this season, with just over 1m from outside growers and 700,000 from its trading business subsidiary Fern Ridge Products.

Scales had upped its ownership of Fern Ridge to 72.88% from 50% in the last year and now consolidated it into the overall accounts.

That added about $30m in annual sales, helping lift Mr Apple sales to $130.6m from $93.6m previously. As a trading company, Fern Ridge operated on lower margins than Mr Apple.

Fern Ridge also traded in grapes, melons and kiwifruit and Scales would be looking to grow that part of the business, Borland said.

The Mr Apple pre-tax profit increased to $36m for the half-year, from $34.4m.

In the other group divisions, Food Ingredients increased revenues to $31m from $22.6m and pre-tax earnings to $4.6m from $3.4m, helped by the Meateor pet food business gaining strongly from new Australian business.

The Storage and Logistics division was slightly lower in earnings, mainly because of the start-up period for the new Auckland coldstore, which was now trading profitably.

With the new Balance air-freight business also growing, Borland expected full-year results to be in line with last year.

Total half-year sales were $209.5m up from $161.2m.

Asian markets now took in about 53% of Mr Apple exports, up from 37% in the 2014 year.

Chinese group China Resources bought a 15% stake in Scales earlier this year and the groups were in talks now on increasing apple sales into its retail stores.

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