Weather hurts apple firm
Scales shares fall after result
Scales Corp shares dropped after the company said first half profit fell 14 per cent after its apple orchards were hit by heavy rain and winds and needed more expensive care.
Net profit was $29 million for the six months to June 30 versus $33.8m in the same period a year earlier, the Christchurch-based company said. Revenue was $216.7m, up 3 per cent on the year, while earnings before interest, tax, depreciation and amortisation dropped 11 per cent to $48.4m.
“During the growing season, the Hawke’s Bay region experienced heavier than normal rainfall as well as heavy winds due to ex-Cyclone Cook. Notwithstanding these conditions the Mr Apple orchard team produced an overall export volume consistent with the record 2016 crop,” said managing director Andy Borland. Rainfall was double the average in two months of the growing season, the apple exporter said.
As a result, it incurred higher costs to “ensure that in a very diff i cult season customers’ expectations were met as far as practicable in terms of quality and volume”.
Scales shares closed down 16c, or 4.43 per cent, yesterday at $3.45.
Expenditure included higher spray costs, storage costs and additional labour in picking and thinning. It noted that combined Mr Apple export volumes are consistent with last year and like-for-like production was only 5 per cent less than 2016 volumes in a challenging season.
Ebitda in its horticulture business was $34.7m, down from $39m in the prior year. It was $11.6m in its storage and logistics business, versus $12m a year earlier, and was $4.2m in its food ingredients business, versus $4.9m.
Scales said the Longview postharvest operations acquired last year added notable efficiency to its postharvest infrastructure. It bought the Hawke’s Bay apple grower, packer and marketer Longview Group for $20.5m in November 2016, adding capacity to sell fruit into the fastgrowing Asian market.
Scales expects full year ebitda to be between $55m and $62m, compared to $67.3m in 2016. —