Underlying net profit for 2019 will come in between $32 million and $37m and the underlying result for 2020 will be between $30m and $36m. Earnings before interest, tax, depreciation and amortisation will fall between $49m and $55m, unchanged from the 2019 forecast.
The company will pay a fully imputed interim dividend of 9.5 cents a share on January 17 to those on the register on January 6 and said its directors are committed to paying not less than a 19 cents annual cash dividend while the company holds net cash.
Scales’ net cash on June 30 was $59m and a 19 cents a share dividend will cost it $26.9m.
“The past year has further reinforced our current strategy and, in particular, the replanting plan for the horticulture division,” the company said, adding it redeveloped 44 hectares into premium apple varieties in 2019 and has scheduled a further 32 acres for next winter.
“For the 2019 season all premium apple varieties to Asia and near markets have experienced record sales results while our traditional varieties had mixed results, particularly late season sales to Europe and the United Kingdom,” managing director Andy Borland said.
“Although the near-term forecasts for fruit volumes remain flat the group expects significant returns from the replanting programme from the 2022 year, in line with our earlier announcements,” Borland said.
The 2020 results will be impacted by the orchard redevelopments, a material increase in capital spending in the horticulture division to address increasing domestic costs including labour and lower interest income, reflecting declining interest rates and the past benefit from selling the storage business.
Scales will provide a further update on 2020 when it delivers its annual results in February, Borland said.
Scales shares closed on Wednesday at $5.12 and have gained 14.5% year-to-date, lagging the benchmark S&P/NZX 50 Index, which has gained 28.4%. – BusinessDesk
