Scales Corp grows and wants more
Apple exporter Scales Corp, confident of at least meeting its $20.8m net profit forecast for the 2015 financial year, is eyeing up potential acquisitions.
The apple producer, headquartered in Christchurch, is pleased with the way the calendar and financial year has started and remains positive about its 2015 initial public offer (IPO) earnings forecast.
Managing director Andy Borland said Scales was investigating ways to develop its agribusiness ‘‘reach’’ through either bolt-on acquisitions or by developing new markets or divisions.
‘‘We’ve got a couple of little [acquisitions] we’re working on. We haven’t concluded them yet, and they may not be . . . we look at a lot of things,’’ he told shareholders at the Scales annual meeting in Christchurch yesterday.
Apart from the apple-exporting business Mr Apple, Scales also runs a coolstores and logistics business and a pet-food ingredients processor.
Tauranga was the next logical place for the company to extend its logistics and cold store business, he said. ‘‘It’s a very dominant port on exports and we will continue to investigate our way to get there.’’
The company was matching its goal of generating a return on capi- tal employed of 15 per cent. The horticulture business was returning 20 per cent on capital employed while the smaller storage and logistics business was returning 11 per cent. Total capital employed was about $150m.
The owner of the country’s biggest apple-growing and exporting business forecast $41.2m of earnings before interest, tax, depreciation and amortisation in the financial year to December 31, 2015. It exports about 25 per cent of the New Zealand crop.
Scales reported a net profit of $18.4 million for 2014, down from 2013’s $20.4m.
Borland said the company was pleased with the way the year had started.
‘‘The apple harvest is now complete. Pleasingly, gross production volumes are above forecast, but final export volumes remain subject to the export recovery packout, as those apples are graded through the packhouse.
‘‘We’ve also sold about a third of the harvest. Net returns are in line with expectations when foreign exchange and freight savings are considered. At this stage there is nothing to suggest that market prices will come under pressure as the season progresses.’’ Final packing of stored apples for export would take place over the next six to eight weeks.
Scales Corp was satisfied that the horticulture division for the year to date supported the IPO forecast for the horticulture division. Coldstore use had started well and petfood trading was in line in the year to April with the prior corresponding months.
The company was satisfied these divisions were on track to deliver on IPO forecasts, Borland said. A further update would be provided at the half year results announcement in late August.
Scales shares yesterday closed 1 cent stronger at $1.74, and above their July 2014 listing price of $1.60.
Borland said the share price had seen a gradual improvement since mid-October.
‘‘[Given a] fully imputed 3 cent dividend paid in December means investors who invested through the IPO have achieved a 10 per cent gross return on their investment to date.’’