Apple exporter on acquisition hunt
The company’s share price rose before and after the latest announcement by Scales managing director Andy Borland, from $4.43 at the end of April to $4.85 a share.
Scales accounts for about 25 per cent of New Zealand’s apple crop and it is expected to make new investments in related businesses.
The buyer of the cold-store businesses was Emergent Cold, which also recently acquired the Swire cold-storage assets in Australia and Vietnam.
The deal requires approval by the Overseas Investment Office.
Borland said Scales was approached by Emergent Cold because Polarcold Stores fitted its broader strategy of acquiring and developing a global network of cold chain businesses.
Scales chairman Tim Goodacre said Scales was adopting a greater focus on pure agribusiness investments.
Last year Scales’ returns – measured on capital employed – from storage activities were lower at 11 per cent versus 20 per cent for other business divisions.
Scales will be focusing on its exports to China in partnership with its 15 per cent cornerstone shareholder China Resources Ng Fung.
The deal will eliminate $40m of Scales’ debt and leave it with $110m in cash.
In 2017 the company earned revenue of $399m, with the cold-store operation accounting for $53m.
‘‘At this stage there is no intention to return capital to shareholders. Rather, the proceeds are intended to be used to pursue other attractive opportunities in New Zealand agribusiness,’’ Goodacre said. Takeaway food and tomato prices rose in April, but chicken is the cheapest it has been in more than 10 years.
Statistics New Zealand said overall food prices remained steady, up 0.1 per cent on the previous month and 2.3 per cent on April last year.
In particular, an upward movement in meat prices was dragged down by a 4.5 per cent fall in chicken prices during the month.
A 1-kilogram pack of chicken pieces was $7.63 in April, down from $8.10 a year ago, and the lowest price since the series began in June 2014.
For the year to April, prices for meat and poultry increased 1.0 per cent, boosted by a 12 per cent rise in pork and a 17 per cent jump in lamb prices, but offset by a 6.8 per cent fall in chicken prices. Beef prices remained flat.
Supermarket company Foodstuffs said poultry pricing was often tied to supply, which had been growing steadily.
‘‘New Zealanders are definitely chicken fans and enjoy the wide variety of value-added options that certainly weren’t available 10 years ago. Supply is good and we’re consuming more chicken on a per capita basis that any other meat type,’’ Foodstuffs spokeswoman Antoinette Laird said.
Demand had been growing for many types of chicken cuts, like butterflied chicken, but the most significant growth has been in freerange chicken, which had been growing at about 20 per cent per year, Laird said.
Statistics NZ said prices for ready-to-eat and grocery foods were on the rise. Ready-to-eat food prices rose 0.7 per cent in April, with ethnic food up 1.6 per cent, takeaway pizzas up 1 per cent and takeaway coffee costs rising 0.7 per cent.
Vegetable prices fell 1.6 per cent in April, led by lettuce, broccoli, and cauliflower after high prices in March. Seasonally adjusted prices fell 5.1 per cent. However, tomatoes bucked the trend, rising 41 per cent this month following an even steeper rise the month before.