Scales forecast up as apple exports lift
Scales Corp, the best-performing stock on the S&P/NZX 50 Index this year, raised its forecast for annual earnings with the apple company citing improvement across all its divisions and a standout performance from its horticulture unit.
Earnings before interest, tax, depreciation and amortisation are expected to be between $66 million and $69m in calendar 2016, ahead of an earlier forecast of between $55m and $62m, and representing an increase of between 7.5 per cent and 12 per cent on the year earlier, the Christchurch-based company said. Underlying net profit is expected to be between $37.2m and $39.4m, ahead of previous guidance of between $29.6m and $34.6m.
NZ’s biggest apple exporter has invested in apple crops that are sought after by customers in Asia and the Middle East, where the sweeter, redder varieties fetch a premium price on average 55 per cent higher than traditional varieties. Its horticulture unit had “a particularly strong performance” due to a significant uplift in export volumes, with fruit quality, particularly towards the end of the season, a highlight.
Its Mr Apple division packed a record 3.5m trays, meeting a 2020 volume target four years ahead of schedule. To aid future growth, Scales in January increased its stake in Hawke’s Bay apple exporter Fern Ridge Produce to 72.9 per cent, and in November bought Hawke’s Bay apple grower, packer and marketer Longview Group Holdings for $20.5m, adding capacity to sell fruit into the fastgrowing Asian market.
The company’s storage and logistics division has benefited from network expansion, improved use of its bulk liquid storage business, and improved cargo volumes in its freight forwarding operation. The food ingredients division is expected to deliver a record sales year, in terms of volumes and revenue, the company said.
Scales will pay an interim dividend of 8c per share in January, ahead of the year-earlier payment of 6.5c. Its final dividend will be announced in May and paid in July.
Its full 2016 annual earnings will be released on February 28.
Scales expects ebitda in the 2017 year of between $55m and $62m, a drop from the 2016 year. Scales shares closed down 1c yesterday at $3.49.