Despite lower profit Scott keeps growing
A 20% drop in net profit for Scott Technology despite a 24% revenue lift is not enough to deter the automation specialist from continued expansion.
Last week, the company said net profit for the 12 months to August 31 fell from $10.7 million to $8.6 million, despite revenue being up to $225 million from $182 million the preceding year.
A day later, the Overseas Investment Office said it had reached a deal with Scott’s majority owner JBS Australia, after a corruption probe.
The OIO said while JBS Australia shareholders Joesley and Wesley Batista did not meet the regulator’s good character test, they were far enough away from the Dunedinbased business.
Shares of the company fell 9.4% to $2.23 on Friday, taking their decline to about 18% this year.
Scott chairman Stuart McLauchlan played down the impact of the probe, telling BusinessDesk it wasn’t really involved with the matter and hadn’t had to make changes to its business.
The ownership was ‘‘working very well. JBS is very supportive, we’ve grown a lot since 2015 when you look at the size of the business, and they’ve certainly encouraged that,’’ he said.
Scott recently purchased Belgian warehouse automation company Alvey, and USbased automated guided vehicle manufacturer Transbotics in 2018. It also purchased a threeperson beefgrading firm Normaclass in June this year, for an initial sum of ¤1.1 million ($NZ1.92 million).
Mr McLauchlan acknowledged the firm had a way to go in bedding down recent acquisitions, but wouldn’t rule out taking on anything else, because Scott has ‘‘growth in its DNA.’’ He said the acquisitions had been profitable this year.
He was confident about receiving the same level of research and development support under the new tax credit regime as before. The company accelerated R&D spending in 2019, from $11 million to $14 million. It is about 6% of revenue.
‘‘It’s mainly the timing of the benefit. Before we got a cash grant and now we get a credit, so we’ve looked at the changes in the scheme and feel we can work with that.’’
Technology worked on during the year included warehouse management software, lamb deboning equipment and Xray pork processing.
The impact of Brexit uncertainty had meant the European market was soft, Mr McLauchlan said, but the company was moving as much out of Germany and to the Czech Republic as possible to cut costs.
The company had bank debt of $16.4 million at August 31, against total shareholders funds of $111.8 million.
Scott declared a final dividend of 4c/share, a 70% payout ratio, retaining funds to support its increasing working capital requirements. — BusinessDesk