Scales - SCL

[ShouldHaveHeld]

Looks as though Pet Food division is proving to be a great success.

Wonder if it is due to a lot of people adopting pets due to lock down.

[bull....]

Wonder if it is due to a lot of people adopting pets due to lock down.

correct.

I see selling above the $5 level prevails as least course of resistance still

[Sideshow Bob]

You may be in luck today.

Market didn't like it - had a bit of a run last little bit.

[MarineSalvage]

I'm true to my word - picked up a modest parcel and will buy more over time if it lingers
Market didn't like it - had a bit of a run last little bit.

[Sideshow Bob]

https://farmersweekly.co.nz/section/agribusiness/view/scales-shares-drop-4-6-as-covid-hits-markets

[MarineSalvage]

Analyst on Hoskings morning show featured SCL - didnt say too much though

[winner69]

Analyst on Hoskings morning show featured SCL - didnt say too much though

Said pet food going gang busters and making up for the decline in apples

[MarineSalvage]

True - I should have said "he didnt say much that we hadnt already said on this thread"!
Said pet food going gang busters and making up for the decline in apples

[bull....]

from the t&g announcement

“Across all markets, we’re witnessing incredible volatility and uncertainty. This is particularly the case in Asia, where sales continue to be impacted by the full or partial closure of wholesale markets, and large quantities of commodity apples remain unsold. This situation continues to unfold globally and we’re managing our costs tightly as we navigate through it

https://www.nzx.com/announcements/357513

[winner69]

Apples fron NZ

https://twitter.com/skyeandfrisa/status/1297554525272891396?s=21

[dibble]

Has anyone seen a reason for yesterday's sell off? Cant find any announcements or other variables...

[RTM]

Has anyone seen a reason for yesterday's sell off? Cant find any announcements or other variables...

Might be concern over whether the industry will have sufficient labour ?
Need to mobilize quite a few Kiwi's. I've been retired a few years...wonder if I (we) could help ?
Something some of the prison population could help with (paid) ? Unemployed ?
Come on...lets do this !

[Ggcc]

Might be concern over whether the industry will have sufficient labour ?
Need to mobilize quite a few Kiwi's. I've been retired a few years...wonder if I (we) could help ?
Something some of the prison population could help with (paid) ? Unemployed ?
Come on...lets do this !
I have already spoken with a few orchardists and they are thinning this year like no other year. They want fewer apples on the trees due to the labour shortage. this will also mean fewer apples in the industry and might mean higher prices for the consumer. orchidists will always do well in the long run, but short-term there are loads of questions about their low wage structure, imported labour and bad labour practices.

I worked in the industry for two years and listened to the complaints of orchidists not earning enough and workers not earning enough. Both had valid points, but were not working together for a better solution.

[dibble]

Might be concern over whether the industry will have sufficient labour ?
Need to mobilize quite a few Kiwi's. I've been retired a few years...wonder if I (we) could help ?
Something some of the prison population could help with (paid) ? Unemployed ?
Come on...lets do this !

Hmm, perhaps. Wonder how those fruit harvesting robots are going, trials a year or so back looked good. Good for horticulture, not so good for unemployment. On the upside their development might create a few high end jobs.

[Sideshow Bob]

SCL starting to spend a little cash??

[winner69]

Bringing up as Bull couldn’t find the Scales thread

Bull’s post -

Apple growers pulling out trees because there are not enough pickers for harvest

He estimated the region was short about 13,000 workers to complete the apple harvest, at a cost to the regional economy of $100 million

https://www.stuff.co.nz/business/far...rs-for-harvest

probably explains the share price weakness

[bull....]

Bringing up as Bull couldn’t find the Scales thread

Bull’s post -

Apple growers pulling out trees because there are not enough pickers for harvest

He estimated the region was short about 13,000 workers to complete the apple harvest, at a cost to the regional economy of $100 million

https://www.stuff.co.nz/business/far...rs-for-harvest

probably explains the share price weakness

cheers winner , the search didnt seem to find it , care to enlighten us how you found it?

[winner69]

cheers winner , the search didnt seem to find it , care to enlighten us how you found it?

Google quite helpful time .....but be good if search here was fixed

Google - scales bull Sharetrader - and hey presto:t_up:

There are more sophisticated ways but that worked

[dibble]

Bringing up as Bull couldn’t find the Scales thread

Bull’s post -

Apple growers pulling out trees because there are not enough pickers for harvest

He estimated the region was short about 13,000 workers to complete the apple harvest, at a cost to the regional economy of $100 million

https://www.stuff.co.nz/business/far...rs-for-harvest

probably explains the share price weakness

Thanks for posting.

Seems a little extreme to rip them out, one wonders what the small holding of land would otherwise profitably be used for. Apples are here to stay (highly nutritious, keep in the fridge for ages).

Article refers to money invested to improve working conditions, probably not a bad thing for a hard job but wherever they got to with the harvesting robots a year back, in the near future I'd be very surprised if a harvest workforce of 13,000 is required. Sort of awful mechanical job that's just ripe for...

Keeping an eye on accumulating a few at present.

[macduffy]

One also wonders if some of the trees pulled out are old varieties being replaced by the newer, sweeter varieties favoured these days, a replacement programme that has been ongoing for some years now.

[Pegasus2000]

Thanks for posting.

Seems a little extreme to rip them out, one wonders what the small holding of land would otherwise profitably be used for. Apples are here to stay (highly nutritious, keep in the fridge for ages).

Article refers to money invested to improve working conditions, probably not a bad thing for a hard job but wherever they got to with the harvesting robots a year back, in the near future I'd be very surprised if a harvest workforce of 13,000 is required. Sort of awful mechanical job that's just ripe for...

Keeping an eye on accumulating a few at present.

As a newcomer for advice, is it right to buy it when downtrend?

[mondograss]

As a newcomer for advice, is it right to buy it when downtrend?

As a general rule of thumb, no you don't want to buy something in a downtrend. However for a little over three years now, Scales has oscillated between about $4.10 - $5.40 with only the one dip below that point at the height of the COVID sell off. So now is definitely a good time to keep a close eye on it and watch for it to bottom out and start coming back up, then buy into the uptrend. You might not necessarily buy at the cheapest price but you'll probably sleep a little better knowing it's going up than going down.

[nizzy]

in contrast to Scales horticulture results, T&G had a good year. Said apples had delivered a strong result. Why so positive compared to Scales? What did they do differently? Securing vessel space? Apple quality?

[Pegasus2000]

As a general rule of thumb, no you don't want to buy something in a downtrend. However for a little over three years now, Scales has oscillated between about $4.10 - $5.40 with only the one dip below that point at the height of the COVID sell off. So now is definitely a good time to keep a close eye on it and watch for it to bottom out and start coming back up, then buy into the uptrend. You might not necessarily buy at the cheapest price but you'll probably sleep a little better knowing it's going up than going down.

Excellent! Thank you very much, mondograss.

[mondograss]

in contrast to Scales horticulture results, T&G had a good year. Said apples had delivered a strong result. Why so positive compared to Scales? What did they do differently? Securing vessel space? Apple quality?

Scales also had a record crop of apples and say that their Europe and UK sales were firm but they were impacted by Asia and the Middle East. The difference might just come down to when the T&G varieties were ready vs when the Scales varieties were ready and which markets were in lockdown at the time. With so much in flux it's probably a bit of a challenge to draw any meaningful conclusions.

[Pegasus2000]

$4.26, my hands are itching...... Think it is down with the main trend of NZX market. Probably back up with US market next week.

[kiora]

One also wonders if some of the trees pulled out are old varieties being replaced by the newer, sweeter varieties favoured these days, a replacement programme that has been ongoing for some years now.

Growing trees on wires increases production /ha by 30% plus easier to pick by hand or machine
https://www.fruition.net.nz/2020/03/apple-growing-systems-running-hot/

[Pegasus2000]

T&G Global already uses robotic picker :
https://www.farmweekly.com.au/story/6961435/nz-apple-orchard-uses-worlds-first-commercial-robot-picker/?src=rss

Not sure if SCL uses the similar tech?

Beautiful apple growing system : https://www.fruition.net.nz/2020/03/apple-growing-systems-running-hot/

[nztx]

Hmmm .. SP seems to have slid a bit since I last looked ... are dividends being shelled out
in bushels of apples now, for that to have happened ? ;)

[Kelvin]

SCL about to buy Villa Maria?

https://www.afr.com/street-talk/nz-listed-scales-corporation-set-to-bottle-up-villa-maria-20210322-p57cx4

[BlackPeter]

SCL about to buy Villa Maria?

https://www.afr.com/street-talk/nz-listed-scales-corporation-set-to-bottle-up-villa-maria-20210322-p57cx4

Great synergy ... they could start a cider-brewery :):

[Pegasus2000]

A bit underwhelming in challenge year ? https://scalescorporation.co.nz/wp-content/uploads/2021/03/2020-Annual-Report.pdf

[Pegasus2000]

Stephen Bennie of Castle Point doesn't give a good mark for the acquisition - NBR

[Sideshow Bob]

Perhaps the cash is starting to burn a hole in their pocket? Been a long time since they sold Polarcold (and since been sold again).

Probably regretting selling Polarcold.....coldstorage is gold currently.

[Pegasus2000]

Read their report a while ago that they will build a brand new cold storage close to the base. Not sure if they are still doing that.

[Balance]

https://www.nzherald.co.nz/business/nerves-on-edge-in-meat-export-industry-as-new-china-audits-spread-from-seafood-to-apples/FMQF3XDIA3AIKYLXMHRQ4WD7FI/

paywalled
New Zealand's $9 billion meat export industry says it's nervous about China's new "live" food safety audits as apple exporters now come in for the same treatment that led to a still-unresolved halt on seafood exports.

"There's a lot of nervousness," said Meat Industry Association (MIA) chief executive Sirma Karapeeva.

"The structure of the audits is quite different to what we are used to and it's caused a lot of nervousness. We are all looking at what is going on with the seafood exports and now apples."

[RTM]

After all the doom and gloom about picking the crop, nice (as a pensioner) to have the dividend confirmed today. Especially as I doubled our holding recently.

https://www.nzx.com/announcements/371422

[Pegasus2000]

https://finance.yahoo.com/news/scales-corporation-limited-nzse-scl-153237517.html

[bull....]

https://finance.yahoo.com/news/scales-corporation-limited-nzse-scl-153237517.html

big warning sign as well was the repeated failure to rise for any lenght of time over 5 dollars

[mondograss]

I rarely find that anything by Simply Wall St is much value. In this article they're rather overlooking the sale of the coolstore business which will have shrunk earnings significantly. The failure so far to reinvest much of that money though is a concern.

[RTM]

https://finance.yahoo.com/news/scales-corporation-limited-nzse-scl-153237517.html


big warning sign as well was the repeated failure to rise for any lenght of time over 5 dollars

Not sure what you expect. We know they struggled to pick the crop. Markets are disrupted with COVID. Shipping a problem as well. Lots of head winds at the moment. And they still rewarding holders with a decent dividend. Happy holder with a 10 year holrizon.

[Balance]

https://www.nzherald.co.nz/business/chinas-audit-of-apple-export-sites-over-now-we-wait-as-seafood-halts-continue/C5SPNED3L7N6CYQAYXFZVY42S4/

This will be preying too on the minds of investors - very very slim chance of anything adverse but any NZ apple export halt by China will be devastating to the industry.

[RTM]

https://www.nzherald.co.nz/business/chinas-audit-of-apple-export-sites-over-now-we-wait-as-seafood-halts-continue/C5SPNED3L7N6CYQAYXFZVY42S4/

This will be preying too on the minds of investors - very very slim chance of anything adverse but any NZ apple export halt by China will be devastating to the industry.

Yes, there is always something to worry about. I can come up with adverse events for many/most of my NZ/OZ investments. So as I’ve said before, I’m well diversified. Not to many eggs in any one basket.
Scales: 4.5% of portfolio. So far…so good.

[MICROSLOTHV2]

FYI Trade audits feature in this Australian recent four corners doco on trade with China an https://www.youtube.com/watch?v=SShvYq5gQ2U

[Ricky-bobby]

Apparently still in DD stage re villa purchase. There will be a few skeletons in that closet! A bit of potential, but also a lot to sort out... totally different to a business such as Delegats

[Pegasus2000]

Villa Maria parent company FFWL in receivership, shares to be sold
https://www.stuff.co.nz/business/industries/125164765/villa-maria-parent-company-ffwl-in-receivership-shares-to-be-sold

[tim23]

Anyone been noticing a slow but steady climb back to $5 over the last few weeks?

[Eden]

Anyone been noticing a slow but steady climb back to $5 over the last few weeks?

Indeed. 10-15% up over the last month or so on relatively low volume (apart from a biggish chunk in mid May). Theories?

[BlackPeter]

Indeed. 10-15% up over the last month or so on relatively low volume (apart from a biggish chunk in mid May). Theories?

Rising tide lifting all boats?

[percy]

Indeed. 10-15% up over the last month or so on relatively low volume (apart from a biggish chunk in mid May). Theories?

May be some answers given at this afternoon's agm.

[bull....]

Perhaps the cash is starting to burn a hole in their pocket? Been a long time since they sold Polarcold (and since been sold again).

Probably regretting selling Polarcold.....coldstorage is gold currently.

i always thought of it as the growth area of the business. looks like the share price has peaked heading back down again now

[percy]

https://www.nzx.com/announcements/373641

[bull....]

https://www.nzx.com/announcements/373641

wow still cant find any businesses after a year to buy , in the mean time is the money from the growth business they sold being used to prop dividends?

[winner69]

Guidance confirmed ebitda 46m to 53 / npat 27m to 33m

Top end in line with 2020

I'd forgotten what a struggle it has been for them to grow profitability over the years

At least not going backward at a great rate

[Eden]

To my eye, the AGM presentations suggest SCL will keep bouncing around in the $4.50 - $5.20 for the foreseeable future.

[Sideshow Bob]

Guidance confirmed ebitda 46m to 53 / npat 27m to 33m

Top end in line with 2020

I'd forgotten what a struggle it has been for them to grow profitability over the years

At least not going backward at a great rate

2018 Polarcold "underlying EBITDA" was $15.1m. They then sold that (and got sold again soon after).

Factor that into the mix and they've been pretty consistent.

Perhaps they'd wish they hadn't. Coldstorage at a premium so sure would be more profitable now based on yield and rates.

[Pegasus2000]

Good move?

as at 16:00:02, Tuesday 15 June, 2021 (NZT)
MKTUPDTE: SCL: Market update
SCL
15/06/2021 16:00
MKTUPDTE
NOT PRICE SENSITIVE
REL: 1600 HRS Scales Corporation Limited

MKTUPDTE: SCL: Market update

15 June 2021

SCALES CORPORATION - MARKET UPDATE

Scales Corporation Limited (Scales) today announces that it is no longer
participating in the sale process for Villa Maria. Due diligence and other
transaction costs incurred during the process will be recognised in Scales'
half-year results to 30 June 2021. Scales reiterates market guidance
previously given for the full 2021 year, noting that transaction costs are
not included in Underlying earnings.

Steve Kennelly
Chief Financial Officer
Scales Corporation Limited
+64 3 371 2263 / +64 274 317587
www.scalescorporation.co.nz

[Eden]

Going teetotal or switching focus to Hawkes Bay winery Sacred Hill perhaps? https://www.stuff.co.nz/business/industries/125416772/receivers-of-sacred-hill-group-put-winery-brand-and-assets-up-for-sale

[Muzz1234]

a smaller acquisition in a business theyre not experienced would be better presuming sacred hill is smaller couldn't find much on internet about hectares of grapes they have

[Ricky-bobby]

God I hope not! Will be bloody interesting to see who takes out Villa…

[RTM]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SCL/375264/349850.pdf

Not ideal....I don't like seeing these.

[Sideshow Bob]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SCL/375264/349850.pdf

Not ideal....I don't like seeing these.

There was this from last week. Looks like still has a few….

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SCL/374672/349119.pdf

[Sideshow Bob]

There was this from last week. Looks like still has a few….

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SCL/374672/349119.pdf

This announcement from 29th of June, and then went ex-div on 30th of June.

[Sideshow Bob]

There was this from last week. Looks like still has a few….

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SCL/374672/349119.pdf

This announcement from 29th of June, and then went ex-div on 30th of June.

[RTM]

Wonder if this has applications in the Apple industry ?
https://www.nzx.com/announcements/375366
https://fruitometry.com/

[peat]

Wonder if this has applications in the Apple industry ?
https://www.nzx.com/announcements/375366
https://fruitometry.com/

it looks awesome tech. and yeh I reckon it will ultimately be transferable to many horticultural arenas.
They mention scale-ability which made me chuckle given its Seeka who are in on it (not Scales). THey may just mean upsizing but probably have considered portability across crops.

[Muzz1234]

Been quiet times for these guys share price slowly trickling lower hopefully they spend some of that money on an acquisition soon get things heading right direction

[Muzz1234]

Indevin buys Villa Maria be interesting to see what the price was what acquisition scales will look for in the future

[Waltzing]

beside innovation in technology some grower showing leadership in the bay..

https://www.stuff.co.nz/business/farming/126081827/gisborne-grower-hopes-to-pay-half-his-workforce-27-an-hour

[Louloubell]

I think this is a great result. Actively protecting against the changed Covid world, well diversified, nice divvie coming (later), 100m cash, and a strong outlook. And that from a company which under promises and over delivers. Moi a happy holder

[Rabbi]

Yes, I hold both SCL and SEK. Both companies are now seeing the fruition of efficiencies and new technology.
SCL starting to hit their straps with management benefiting now from the years of experience of making mistakes.
Market will reward with higher SP in coming weeks as potential for incremental growth is significant.

[RTM]

Yes, I hold both SCL and SEK. Both companies are now seeing the fruition of efficiencies and new technology.
SCL starting to hit their straps with management benefiting now from the years of experience of making mistakes.
Market will reward with higher SP in coming weeks as potential for incremental growth is significant.

And i thought they couldn't get their Apples picked, couldn't get labour, couldn't get shipping containers, couldn't get ships etc etc etc.
I guess it just depends on what radio station one chooses to listen to.

Yes....I doubled up on SEK and SCL in the last 12 months as well. Very pleased. Once again....good to see productive companies in NZ doing well.
Now...we just need Fonterra to sort itself out. And yes...I increased my holding there as well. Ooops...don't forget Skellerup.

[Louloubell]

"SCL starting to hit their straps with management benefiting now from the years of experience of making mistakes."

I like your post, but don't agree with the quote above.

[Muse]

yeah agree - Scales management have done a phenomenal job since its been listed and years prior to that. Perhaps management prior to Andy Borland made missteps but this management team have performed well

[Sideshow Bob]

Obviously still looking to spend their cash pile. I see they were looking at something for their food division, but wasn’t completed. Must have got a reasonable way down the road given their comment on costs….

[Muzz1234]

Think it was Villa Maria they where looking at from memory

[Muse]

I think they have looked at a lot of things. But they are very conservative and seemingly afraid to pull the trigger. I applaud their discipline but they also need to think outside the box and forget the days of buying things for 8x ebit. Maybe they need a shake up and some fresh advisors, otherwise give the money back. Id rather they did some serious regrafting, land acquisition, or expansion into other horticulture (avadado, cheries, lime, even kiwifruit) if they cant acquire something sensibly

[Muzz1234]

Think staying away from vineyards is a good start hard industry to make decent return out of be good to see them expand and grow rather then return the cash

[RTM]

Think staying away from vineyards is a good start hard industry to make decent return out of be good to see them expand and grow rather then return the cash

Agree with respect to the vineyards.
I'd rather they returned the cash to shareholders, they can always raise more should they need it if they find an appropriate avenue of growth.

[Pegasus2000]

Great synergy ... they could start a cider-brewery :):
Agree. Too many wine and cider producers in the market :).

[Getty]

I think they have looked at a lot of things. But they are very conservative and seemingly afraid to pull the trigger. I applaud their discipline but they also need to think outside the box and forget the days of buying things for 8x ebit. Maybe they need a shake up and some fresh advisors, otherwise give the money back. Id rather they did some serious regrafting, land acquisition, or expansion into other horticulture (avadado, cheries, lime, even kiwifruit) if they cant acquire something sensibly

Seeka, SEK is a gift at current price, would be a tidy fit into Scales.

[Louloubell]

A golden run. I wonder if they are close to spending some of their money

[Muse]

A golden run. I wonder if they are close to spending some of their money

* our money *

Yes hope so. Assume the run last few days based on loosened RSE rules?

[Louloubell]

From $4.40 six weeks ago to $5.70 now

[Muzz1234]

Hopefully it's money spending on acquisition imagine they'll be looking forward to getting more rse workers in to give them some guaranteed workers who can't go elsewhere

[Muse]

From $4.40 six weeks ago to $5.70 now

Craigs Investment Partners wondered out loud this morning if it was due to a global rerating of petfood businesses

"SCL has been on a tear of late...difficult to know the driver other than sentiment towards its petfood business which is hotter than crypto at the moment following the extraordinary sale price for south island based vertically integrated petfood brand Ziwi which sold for 28x trailing EBITDA....move over infrastructure - petfood appears the most sought after asset class."

What is interesting to me is Scales does own a large petfood business but doesn't really promote it in a way the market will ascribe value to it in the sense buyers will when a business is being sold. Also based on my understanding Scales petfood business is a JV in its meator food with its main supplier and then a majority shareholder in USA based shelby. Perhaps scales would be better to try to vertically integrate on its own. broaden its supply based, consolidate 100% control over both assets, and creap out of MDM to a branded product. Promote that loudly and proudly and would get a massive re rate. and probably an offer to buy it - but would prefer is scales didnt sell given they don't seem able to acquire in this market.

[Muzz1234]

Not being able to aquire anything definitely something they're good at investing in or starting pet food business would be perfect for these guys when they have got access to all raw product they could hope for give them an advantage before they started

[Sideshow Bob]

There is a big difference between a commodity ingredient business, and a consumer-facing branded petfood business.

Undoubtedly, raw material is going to become more important - even in NZ with pressures on farming - regulation, social and environmental. Meateor have taken steps in recent years to strengthen their hand in raw material supply - ie JV with Alliance meaning they get a large chunk of raw material, acquiring part of Shelby for US distribution and also buying/closing the WE plants to take out a competitor.

Petfood has also gotten more on to the radar of red meat processors in recent years. Gone are the days when everything was rendered - now just the last resort. Much more is saved to pet material (or other uses), much more valued and is an increasing component of what they pay farmers. I think red meat processors will continue to become more involved in petfood space in one way or another - rather than just traditionally being hands-off sellers.

The good aspect with the likes of the sale of Ziwi and K9 (Natural Petfood Group) is that they weren't bought to do the status quo volumes - but to expand their business (Ziwi have their new Napier plant being built). From an NZ perspective, it will mean more is processed onshore here, compared to frozen raw material going into a container to be processed in the US. There are other factories also being built/expanded in NZ that will process more raw material (typically for their foreign owners).

The value ascribed to Ziwi and K9 is in the brand, and the sales/cashflows/profits they can generate off the brand. Difficult to compare with Meateor, as while in the same broader industry and a strategic and important raw material supply - it's a different kettle of MDM. Lesser risk, no investment to build a brand but more difficult to attain a large/sustainable margin that branded products offer. Going forward I think it will be about what is the best strategic use of that raw material.

[Sideshow Bob]

Shipping problems, especially for apples and petfood.....


Market update - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/384298)

The directors of Scales Corporation Limited (NZX:SCL) have declared a fully imputed interim cash dividend for the 2021 financial year of 9.5 cents per share, to be paid on 14 January 2022. The directors reiterate their commitment to paying an annual cash dividend level of no less than 19 cents per share whilst the company holds Net Cash, although at a level no greater than actual Underlying Net Profit Attributable to Shareholders for each year.

With regard to Guidance for the twelve months to 31 December 2021, directors advise that Underlying Net Profit is now expected to be at the upper end of the previously advised range, of $32.0 million to $37.0 million (which implied an Underlying Net Profit Attributable to Shareholders range of $23.5 million to $28.5 million). This is mainly due to the continued strong performance of the Food Ingredients division.

Managing Director Andy Borland says “The 2021 year has been another challenging one across the Group. Consequently, it is very pleasing to positively update our forecast financial result for the year. Scales continues to benefit from our diversified nature and, in particular this year, from the strategic advantage that Scales Logistics brings to the Group”.

“Whilst 2021 has seen the continuation of disruption to domestic and international operations, Scales’ diversification has helped mitigate this disruption. We have also continued our dual focus on stabilising margins in Mr Apple and the wide-ranging growth initiatives within Food Ingredients. At Mr Apple, the latest phase of orchard redevelopment, predominantly into the Dazzle variety, was completed, and the new cool store adjacent to the Whakatu packhouse was fully operational. The multi-year automation project also commenced. For Food Ingredients, a number of initiatives to further extend our range of services and products are being pursued. Other investment opportunities, both within our existing business sectors and externally, continue to be reviewed.

Looking ahead to the 2022 financial year, directors will now provide full year Guidance based on Underlying Net Profit Attributable to Shareholders, ensuring consistent earnings per share comparisons for each year. The Underlying Net Profit Attributable to Shareholders Guidance range for 2022 of $23.5 million to $28.5 million is at the same level as 2021 initial Guidance.
In providing Guidance for 2022, directors note:

• Selling prices within the horticultural division are forecast to be generally consistent with 2021;
• In addition to the increased costs for logistics incurred during 2021, the Group will incur further significant shipping cost increases. Whilst some of these increases will abate over time, there will be an additional negative impact for 2022;
• The on-going shortage of labour across the agri sector, reiterating the importance of Mr Apple’s automation project;
• The Group has again assumed that the current initiatives within the horticulture industry to source seasonal labour will be sufficient to meet requirements;
• It is also assumed that businesses will continue to operate on a business-as-usual basis, considering the current COVID-19 settings in New Zealand;
• The Group will continue to focus a material level of capital expenditure on gross margin improvement initiatives within Mr Apple for the 2022 year;
• The Guidance range implies:

i. an Underlying Net Profit range of between $30.5 million and $35.5 million; and
ii. an Underlying EBITDA range of between $62.0 million and $67.0 million.

Both ranges are in line with initial Guidance for 2021.

• A further update will be provided as part of the 2021 year-end announcement, scheduled for February 2022.

[Muse]

Shipping problems, especially for apples and petfood.....


Market update - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/384298)

The directors of Scales Corporation Limited (NZX:SCL) have declared a fully imputed interim cash dividend for the 2021 financial year of 9.5 cents per share, to be paid on 14 January 2022. The directors reiterate their commitment to paying an annual cash dividend level of no less than 19 cents per share whilst the company holds Net Cash, although at a level no greater than actual Underlying Net Profit Attributable to Shareholders for each year.

With regard to Guidance for the twelve months to 31 December 2021, directors advise that Underlying Net Profit is now expected to be at the upper end of the previously advised range, of $32.0 million to $37.0 million (which implied an Underlying Net Profit Attributable to Shareholders range of $23.5 million to $28.5 million). This is mainly due to the continued strong performance of the Food Ingredients division.

Managing Director Andy Borland says “The 2021 year has been another challenging one across the Group. Consequently, it is very pleasing to positively update our forecast financial result for the year. Scales continues to benefit from our diversified nature and, in particular this year, from the strategic advantage that Scales Logistics brings to the Group”.

“Whilst 2021 has seen the continuation of disruption to domestic and international operations, Scales’ diversification has helped mitigate this disruption. We have also continued our dual focus on stabilising margins in Mr Apple and the wide-ranging growth initiatives within Food Ingredients. At Mr Apple, the latest phase of orchard redevelopment, predominantly into the Dazzle variety, was completed, and the new cool store adjacent to the Whakatu packhouse was fully operational. The multi-year automation project also commenced. For Food Ingredients, a number of initiatives to further extend our range of services and products are being pursued. Other investment opportunities, both within our existing business sectors and externally, continue to be reviewed.

Looking ahead to the 2022 financial year, directors will now provide full year Guidance based on Underlying Net Profit Attributable to Shareholders, ensuring consistent earnings per share comparisons for each year. The Underlying Net Profit Attributable to Shareholders Guidance range for 2022 of $23.5 million to $28.5 million is at the same level as 2021 initial Guidance.
In providing Guidance for 2022, directors note:

• Selling prices within the horticultural division are forecast to be generally consistent with 2021;
• In addition to the increased costs for logistics incurred during 2021, the Group will incur further significant shipping cost increases. Whilst some of these increases will abate over time, there will be an additional negative impact for 2022;
• The on-going shortage of labour across the agri sector, reiterating the importance of Mr Apple’s automation project;
• The Group has again assumed that the current initiatives within the horticulture industry to source seasonal labour will be sufficient to meet requirements;
• It is also assumed that businesses will continue to operate on a business-as-usual basis, considering the current COVID-19 settings in New Zealand;
• The Group will continue to focus a material level of capital expenditure on gross margin improvement initiatives within Mr Apple for the 2022 year;
• The Guidance range implies:

i. an Underlying Net Profit range of between $30.5 million and $35.5 million; and
ii. an Underlying EBITDA range of between $62.0 million and $67.0 million.

Both ranges are in line with initial Guidance for 2021.

• A further update will be provided as part of the 2021 year-end announcement, scheduled for February 2022.


Good result for this year - soft (as always) guidance for the next. Very conservative management team - they tend favour baseline/average assumptions in lieu of recent prices, but that's appropriate given the volatility of the sectors they play in. Almost always beat guidance or meet the upper end.
It's good they own their own freight forwarding operation. I just wished they moved a bit faster on acquisitions particularly in pet food - with less bloody JVs taking. Minority share of npat getting a bit big.

[Sideshow Bob]

It's good they own their own freight forwarding operation. I just wished they moved a bit faster on acquisitions particularly in pet food - with less bloody JVs taking. Minority share of npat getting a bit big.

Always an advantage having their own freight-forwarding business, but can see that shipping is going to be a bigger sh1t fight next year, especially for petfood and apples.

Maersk are pulling out of Napier and not giving freight forwarders space allocations - most likely in favour of Kotahi (who's are one of Maersk top 3 customers globally). Most of SCL's petfood ingredients would come out of Napier/Port Chalmers, and few container options out of Port Chalmers. Napier would be big for apples.

NZ freight forwarders dismayed by new Maersk shipping restriction - NZ Herald (https://www.nzherald.co.nz/business/nz-freight-forwarders-dismayed-by-new-maersk-shipping-restriction/6Z7HAUIMOWGMF4TXM36XCRBQF4/)

[RTM]

Shipping problems, especially for apples and petfood.....




Yep, businesses always face problems SB, its how they go about resolving them that counts.
Pretty decent result in a troubled word. I added in the 4.60's...happy camper here.

[BlackPeter]

Shipping problems, especially for apples and petfood.....



... but still earnings at the upper end of the forecast, can't be all that bad, can it?

[IAK]

Up 4.5% to an all time high of $5.86.Something up I wonder?
Disc. Holding

[Louloubell]

I like companies that consistently underpromise and over deliver. Scales embodies this. Shares in Scales are for the bottom drawer for me.

[Sideshow Bob]

2021 Annual Results announcement - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/387841)

Diversified agribusiness group Scales Corporation Limited (NZX:SCL) today reported its FY2021 full year results. Profit for the Year was $36.9 million (FY2020: $26.6 million). Earnings per share for FY2021 were 19.1 cents per share (FY2020: 15.0 cents per share).
• Group FY2021 financial results:
o Revenue of $514.6 million, up 9 per cent (FY2020: $470.7 million)
o Reported NPAT of $36.9 million, up 39 per cent (FY2020: $26.6 million)
o Underlying NPAT attributable to shareholders of $29.7m, up 8 per cent (FY2020: $27.5m)
o Underlying NPAT of $39.8 million, up 20 per cent (FY2020: $33.0 million)
o Underlying EBITDA of $73.8 million, up 15 per cent (FY2020: $64.1 million)
• Outstanding performance across all divisions:
o Food Ingredients exceeding the EBITDA target for the division
o Horticulture performing strongly in a challenging environment
o Logistics financial performance returning to previous levels
Scales Corporation Chair Tim Goodacre commented: “Once again, the hard work and dedication of the entire Scales team has excelled in what has been another challenging year, with all divisions performing strongly.”

[percy]

2021 Annual Results announcement - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/387841)

Diversified agribusiness group Scales Corporation Limited (NZX:SCL) today reported its FY2021 full year results. Profit for the Year was $36.9 million (FY2020: $26.6 million). Earnings per share for FY2021 were 19.1 cents per share (FY2020: 15.0 cents per share).
• Group FY2021 financial results:
o Revenue of $514.6 million, up 9 per cent (FY2020: $470.7 million)
o Reported NPAT of $36.9 million, up 39 per cent (FY2020: $26.6 million)
o Underlying NPAT attributable to shareholders of $29.7m, up 8 per cent (FY2020: $27.5m)
o Underlying NPAT of $39.8 million, up 20 per cent (FY2020: $33.0 million)
o Underlying EBITDA of $73.8 million, up 15 per cent (FY2020: $64.1 million)
• Outstanding performance across all divisions:
o Food Ingredients exceeding the EBITDA target for the division
o Horticulture performing strongly in a challenging environment
o Logistics financial performance returning to previous levels
Scales Corporation Chair Tim Goodacre commented: “Once again, the hard work and dedication of the entire Scales team has excelled in what has been another challenging year, with all divisions performing strongly.”

Great result.
Why did I ever sell.?

[Sideshow Bob]

Great result.
Why did I ever sell.?

They looked to have weathered the challenges of shipping, however I think the challenges are only getting bigger this year.

[Muse]

highly credible results. great business.
shame they sold the storage business. haven't done anything with the cash and its just getting eaten by inflation. i'd rather that happened in my bank account than theirs :)
that's the price you pay for discipline and conservatism, which isn't that great a price.
held since the float and only top up since.

[Sideshow Bob]

highly credible results. great business.
shame they sold the storage business. haven't done anything with the cash and its just getting eaten by inflation. i'd rather that happened in my bank account than theirs :)
that's the price you pay for discipline and conservatism, which isn't that great a price.
held since the float and only top up since.

Coldstorage is gold at the moment, and most of them are pretty full - great for return, not so great for getting product in or out. Polarcold got sold to Emergent, then they got sold to Lineage from the US. Operating costs of coldstores have increased, but so have rates.....

Yes, disappointing not found anything to do with the cash since.

[kiora]

Maybe sold due to risks about refrigerants and rising costs ?
https://environment.govt.nz/assets/publications/Projections-of-HFC-stocks-and-emissions-to-2050-in-relation-to-key-factors-influencing-HFC-consumption.pdf
https://environment.govt.nz/assets/publications/Projections-of-HFC-stocks-and-emissions-to-2050-in-relation-to-key-factors-influencing-HFC-consumption.pdf

[RTM]

https://www.rnz.co.nz/audio/player?audio_id=2018836986

About 2:34 in. Robotic packing of Apples.
I guess this could easily apply to KiwiFruit as well.

[Sideshow Bob]

2022 Interim Results announcement - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/397476)

Highlights – 6 months to 30 June 2022 (1H22)
• Underlying NPAT Attributable to Shareholders of $25.6 million (1H21: $29.0 million), down 11.7%
• Reported NPAT of $35.1 million (1H21: $32.6 million), up 7.5%
• Outstanding performance in petfood ingredients businesses
• This, together with the success of our divisional strategy and the growth opportunities that have been identified, has led to a renaming of the Food Ingredients division to Global Proteins
• Logistics continuing to prove strategically important, providing vital services and solutions for both internal and external customers
Diversified agribusiness group Scales Corporation Limited (NZX:SCL) today reported its 1H22 results where an outstanding performance by its Global Proteins division and steady earnings from its Logistics division were impacted by lower Horticulture results.

[Sideshow Bob]

https://www.nzx.com/announcements/399429


Investment in Australian petfood and edible proteins

27/9/2022, 8:31 amGENERAL27 September 2022

SCALES CORPORATION ANNOUNCES INVESTMENT IN PETFOOD AND EDIBLE PROTEINS BUSINESSES IN AUSTRALIA
Scales Corporation Limited (NZX:SCL) today announced the entry into two agreements to expand its Global Proteins division in Australia.

The agreements are:
• The subscription for a 33% interest in a newly established petfood processing operation to be based in Melbourne. Scales will be partnering with two recognised industry participants who bring extensive supply relationships
• Concurrently, Scales has entered into an agreement to purchase 50% of the Australian operations of Fayman International, including a 42.5% interest in ANZ Exports (collectively Fayman International and ANZ Exports are referred to hereinafter as “Fayman International”)

The combined initial investment from Scales is estimated at A$27 million, to be funded from Scales’ existing cash reserves.
Managing Director Andy Borland says: “the investments announced today demonstrate Scales commitment to Global Proteins, both in terms of expanding our geographical reach as well as the range of products that we are able to supply.”

“As demand for proteins increases, access to global supply and key growth markets becomes increasingly important. Australia’s product mix, growth, and proximity to Asia make it a strategically important supply base for both our petfood customers and edible by-products markets. The partnership that we have entered into significantly strengthens our diversity of proteins and our supplier base. The investment also unlocks potential synergies in our sea-freight logistics activities.”

“We are very pleased to be able to invest in a bricks-and-mortar processing facility in Australia. The facility shall be focused on the production of petfood ingredients from inedible meat by-products, similar to the ingredient processing operations currently operating in New Zealand and the USA. The business, to be known as “Meateor Australia Pty Ltd” is investing in state-of-the-art equipment to develop a high-quality processing facility. The facility is expected to be operational in Q1 2023 and will scale up to full production later in the same year. Our partners include the Fayman family, who bring extensive supply relationships to the operation.”

“Fayman International has been successfully developed and grown over the past 40 years and has strong relationships with suppliers and customers.”

Marvin Fayman, Chairman of Fayman International says: “the Fayman family believes Scales is an ideal partner to help Fayman International continue to grow and to provide improved solutions to our supplier partners, for both their edible and inedible meat by-products. We are excited to partner with the Meateor and Scales team and look forward to leveraging the opportunities available to both businesses.”

Scales’ directors note that the investments are unlikely to have a material effect on earnings for FY22 and also note the possibility for some disruption to earnings whilst the investments are integrated and ahead of Meateor Australia becoming fully operational.

[bull....]

big drop in apple sales ... guess its a downgrade

Mr Apple has sold 79% of the 2022 export crop, compared to 90% of the 2021 export crop, at the same time last year

https://www.nzx.com/announcements/401473

[Ricky-bobby]

Word on the street is the cool stores are chooka with apples… just not moving.

[BlackPeter]

Word on the street is the cool stores are chooka with apples… just not moving.

Maybe they should reduce the price instead of throwing them away?

[Ricky-bobby]

Maybe they should reduce the price instead of throwing them away?

One of the biggest issues is getting them out of the country… we are also struggling to export. Getting product to Nelson port has been a nightmare (road closures etc) and then ships are cancelling the route as it’s not reliable cargo. It’s a bit of a shambles…

[Sideshow Bob]

Word on the street is the cool stores are chooka with apples… just not moving.

Maybe they shouldn't have sold their coldstore business......

[Sideshow Bob]

One of the biggest issues is getting them out of the country… we are also struggling to export. Getting product to Nelson port has been a nightmare (road closures etc) and then ships are cancelling the route as it’s not reliable cargo. It’s a bit of a shambles…

Scales have a freight forwarding business, and from memory ship around 40,000 TEU per year. Expect they'd give their own businesses such as Meateor and their apples some sort of allocation/priority on this, at least from given ports and on specific shipping routes.

Agree vessel reliability and timeliness is a complete f'ing shambles. :(

[BlackPeter]

One of the biggest issues is getting them out of the country… we are also struggling to export. Getting product to Nelson port has been a nightmare (road closures etc) and then ships are cancelling the route as it’s not reliable cargo. It’s a bit of a shambles…

Lots of Kiwi can't afford anymore to pay for fresh fruit. Pretty disgusting to learn that the profiteers on the other side prefer to have their fruit rotting instead of selling them for normal prices.

[Ricky-bobby]

Maybe they shouldn't have sold their coldstore business......

Not sure if it’s just mr apples… I think the whole industry has the issue.

[see weed]

They could start making apple cider for the local market.

[BlackPeter]

They could start making apple cider for the local market.

They could, but kg prices for windfall fruit used for juicing are very low indeed ...

[Sideshow Bob]

https://www.nzx.com/announcements/403815

2022 INTERIM DIVIDEND &TRADING UPDATE AND 2023 GUIDANCE

The directors of Scales Corporation Limited (NZX:SCL) have declared a fully imputed interim cash dividend for the 2022 financial year of 6.0 cents per share, to be paid on 16 January 2023. Due to the late finalisation of the 2022 apple season, directors have agreed to split the annual dividend payments for the 2022 financial year into three instalments. The second payment will be announced with the year end results and the third scheduled in early July as usual.

The directors reiterate their commitment to paying an annual cash dividend level of no less than 19 cents per share whilst the company holds Net Cash, although at a level no greater than Underlying Net Profit Attributable to Shareholders for each year.

With regard to Guidance for the twelve months to 31 December 2022, directors confirm the Underlying Net Profit Attributable to Shareholders range of $23.5 million to $28.5 million remains achievable, although it is very unlikely that this will now be at the top of the range. The recent change to the trading outlook and higher level of uncertainty regarding the year end result is due to the unprecedented delay in finalising the apple sales season.

A further update will be provided as part of the 2022 year-end announcement, scheduled for February 2023.

Managing Director Andy Borland notes “For the 2022 apple season Mr Apple continues to finalise sales, primarily in our key markets of China and Europe. As a result of the widely reported market turbulence in both markets, final results are still some weeks away and cashflows from sales and outstanding receivables are materially slower than normal years. We are also in the process of resolving a significant crop insurance claim in relation to the 2022 apple season.

As previously reported, Scales continues to benefit from our diversified nature and, in particular this year, from the growth of the Global Proteins division, both organically and via acquisition. The division is forecast to report a record 2022 result and a positive outlook for 2023”.

Looking ahead to the 2023 financial year, directors advise an Underlying Net Profit Attributable to Shareholders Guidance range of $23.5 million to $28.5 million, which is at the same level as 2022 initial Guidance.

In providing Guidance for 2023, directors note:

• Apple volumes and selling prices within the horticultural division are forecast to be generally consistent with 2021 levels;
• Key markets of China and Europe are expected to perform on a business-as-usual basis, near levels seen prior to COVID-19 and other market disruptions;
• The Group will delay the material level of capital expenditure on gross margin improvement initiatives within Mr Apple for the 2023 year;
• Due to the recent announcements concerning the Global Proteins initiatives in Australia it is expected the 2023 first half result will incur material start up operating costs;
• The Guidance range implies:
o an Underlying Net Profit range of between $35 million and $42 million; and
o an Underlying EBITDA range of between $68 million and $77 million.

[bull....]

lower div now gives them option of cancelling next one if things get worse :scared:

[777]

lower div now gives them option of cancelling next one if things get worse :scared:

Going to three divs per year though which is a good move.

[BlackPeter]

looks like an earnings upgrade (compared to analyst expectations for 2023). Obviously - early days, but this is good;

[Ricky-bobby]

Be careful with this one… I know there is a whole lot of apple dumping going on due to rotting in cool stores… similar problem to what’s happening with kiwi fruit.

[RTM]

Be careful with this one… I know there is a whole lot of apple dumping going on due to rotting in cool stores… similar problem to what’s happening with kiwi fruit.

It's pretty hard to buy a decent apple. Had some recently that are soft in the end ...R Gala...yuck. They look fine until one bites into them. Tried Braeburn...not much better.
So we just planted a Coxes Orange...see how that goes.
One wonders how our overseas customers get on.
Disc: Holding.

[Snoopy]

It's pretty hard to buy a decent apple. Had some recently that are soft in the end ...R Gala...yuck. They look fine until one bites into them. Tried Braeburn...not much better.
So we just planted a Coxes Orange...see how that goes.
One wonders how our overseas customers get on.
Disc: Holding.


In this age of coolstores it is sometimes easy to forget that apples are not a year round crop. I buy my apples off an organic grower in greater Christchurch. Last week when I bought some (Braeburn and pink lady IIRC), the grower chucked in an extra Braeburn apple saying that they had feedback of apples looking great on the outside but not looking not so good inside. This is what you might expect at this time of year for NZ grown apples, all of which will be coming out of coolstores.

If you think planting a Cox's Orange apple tree will fix your apple issues in December, you will be sadly disappointed. IMO Cox's Orange are the best apples of all for taste and texture when in their prime. But Cox's Orange are a heritage apple that has not been bred for long life. The have a fairly short season and do not store well. March, April and May is the best apple time. I bought some beautiful succulent peaches the other day. Stone fruit is the best way to go in December.

SNOOPY

[keepitsimple]

There is only one apple worth buying in the suppermarket,pacific rose,particuly the dark red ones.

[Filthy]

There is only one apple worth buying in the suppermarket,pacific rose,particuly the dark red ones.

I used to enjoy pacific rose too. Can sometimes be soft though, depending on the time of year. Export quality NZ 'Jazz' Apples are supreme though. Remember chomping them down when I once lived in London; even the domestic ones are pretty good too. Think the update today wasn't too bad; not good though either. Just BAU. Should continue its holding pattern one would assume....

[RTM]

I used to enjoy pacific rose too. Can sometimes be soft though, depending on the time of year. Export quality NZ 'Jazz' Apples are supreme though. Remember chomping them down when I once lived in London; even the domestic ones are pretty good too. Think the update today wasn't too bad; not good though either. Just BAU. Should continue its holding pattern one would assume....

I don't like the trend to the ultra sweet apples we now seem to have mostly.
No Snoopy....realize our one Cox's orange apple tree will not solve any of my apple problems....however with luck we will get a few apples that we do like,

[777]

May be Scales should get into the cider game.

[Sideshow Bob]

As seen with Seeka (and Zespri), horticultural exports can struggle with weather, supply dynamics, seasonality and other factors outside of producers control. Not to mention the tyranny of distance. While have their own logistics arm, will be still suffering from the high cost of getting anything anywhere.

The "global protein" division seems like the shining light currently - Shelby appears a good acquisition, Meateor going well and their Australian foray I think is a good strategic move given the supply market over there.

[bull....]

market not liking the outlook ?

[winner69]

Been many years since Scales share price been this low

A close below 4 bucks could be ominous

[mshierlaw]

I topped up today, then a strong close, I'm a happy camper.

[Filthy]

down ~5% today, presumably because of cyclone woes. an update from the company on how it is weathering events (pun intended) would be nice.

Interesting that SEK hasn't lost any ground at all. Maybe its all good in kiwifruit land?

[enzed staffy]

probably not helped by video of the RSE workers on top of their accommodation and the water lapping a few centimetres lower. Not saying they're Scales RSE workers - but it gives a stark image of the horticultural devastation being endured

[Sideshow Bob]

Had heard previously the apple crop in the Hawkes Bay had been decimated by the rain and poor summer. That was before Gabrielle...:(:crying:

[BlackPeter]

down ~5% today, presumably because of cyclone woes. an update from the company on how it is weathering events (pun intended) would be nice.

Interesting that SEK hasn't lost any ground at all. Maybe its all good in kiwifruit land?

Big update in two weeks ... but sure, there is probably a brief announcement earlier. However - maybe they first want to wait for the weather event to end? Might make sense, anyway.

[bull....]

big warning sign as well was the repeated failure to rise for any lenght of time over 5 dollars

yep the charts fore - warned off the storm to come in the stock

[nztx]

Had heard previously the apple crop in the Hawkes Bay had been decimated by the rain and poor summer. That was before Gabrielle...:(:crying:

https://www.nzherald.co.nz/hawkes-bay-today/news/state-of-emergency-declared-in-napier-and-hastings-as-evacuations-take-place-across-districts/DHMKIFTC5VEZJMVDM3NREA6YBA/


Look further down this article - a photo of HB Apples cyclone shaken from the trees and being washed ..
untold of them by looks ..

[bull....]

1100 heactares of apples in hawkes bay

Hawke’s Bay orchards were pummelled by cyclone Gabrielle with photos emerging today of apples floating in floodwater after being blown off trees

https://www.nzherald.co.nz/business/flood-losses-for-growers-a-risk-to-nz-food-security/BSZS6W4K4FGEXNDTADM6K2STPA/

[Sideshow Bob]

1100 heactares of apples in hawkes bay

Hawke’s Bay orchards were pummelled by cyclone Gabrielle with photos emerging today of apples floating in floodwater after being blown off trees

https://www.nzherald.co.nz/business/flood-losses-for-growers-a-risk-to-nz-food-security/BSZS6W4K4FGEXNDTADM6K2STPA/


Poor buggers.....:crying:

[Filthy]

an update from the company on how it is weathering events (pun intended) would be nice.

https://www.nzx.com/announcements/406691 - update has arrived. must be reading this thread - thanks andy, much appreciated.

[bull....]

Cyclone Gabrielle: The $7 billion horticulture industry takes a hammering
talking about soil damage

https://www.nzherald.co.nz/business/cyclone-gabrielle-the-7-billion-horticulture-industry-takes-a-hammering/B5V33PMPBNDBNNMUFWQM26MWO4/

[Ricky-bobby]

I really feel for these guys and the local HB community. These guys will bounce back, kiwi farmers always do! Silver lining is it will help balance their oversupply. also really like scales diversification into pet food for these such occasions. Will the balance sheet take this hit or are they already highly geared and will need to raise some funds?

[bull....]

bad for them alright . saw on the news last night all those apples floating around and the guys whole orchard washed away :(

[Sideshow Bob]

Guidance withdrawn. Their Meateor plant in Hastings can't have been affected.


https://www.nzx.com/announcements/406950

The Directors of Scales Corporation (NZX:SCL) advise that due to the wide ranging impacts of Cyclone Gabrielle on the Hawke’s Bay region, Scales is withdrawing its 2023 Underlying Net Profit Guidance.
The priority for all Scales’ businesses remains the safety and well-being of our staff and this continues to be our primary focus.
Of our Group operations, the material impact at this time is to Mr Apple’s orchards. The initial assessment is that this impact covers 4 of their 15 orchards (of the 4 damaged orchards, 3 have extensive damage and 1 moderate). Further limited crop damage is also anticipated to the remaining orchards from the effects of the cyclonic event. Scales does not hold crop insurance for this event.

The 2023 harvest started prior to the cyclone and, with 3% picked, there is still a substantial proportion of the crop available and remaining to be harvested for export. Picking has recommenced, with cool-storage and packing activities back underway early in the week.

Scales does not forecast any material operating impact on its other business units, which accounted for the majority of group operating profits for previous years. Further details to be released with the year-end announcement.

[buy_high_sell_lo]

Surprised to read that they don't have crop insurance. The impact will go straight to the bottom line.

[percy]

Surprised to read that they don't have crop insurance. The impact will go straight to the bottom line.

What their loses are this year is what I expect their yearly crop insurance would have cost.
Too expensive on a yearly basis..

[dibble]

Surprised to read that they don't have crop insurance. The impact will go straight to the bottom line.

I read it differently..."for this event"... suggesting they just dont have insurance for wind, rain, hail, that sort of thing. Id be very surprised if they werent covered for space pixies, flubber and the likes.

[bull....]

Surprised to read that they don't have crop insurance. The impact will go straight to the bottom line.

yep that why guidance has been removed and i imagine forward yrs will reflect lower crops when they update it all

[Sideshow Bob]

yep that why guidance has been removed and i imagine forward yrs will reflect lower crops when they update it all

Something like 2 years in a nursery to grow an apple tree and then another 5 years before they start harvesting from them.....could have very big implications.

[Sideshow Bob]

https://www.nzx.com/announcements/407177

STRONG GROUP PERFORMANCE DRIVEN BY RECORD GLOBAL PROTEINS RESULT

Highlights – 12 months to 31 December 2022

Diversified agribusiness group Scales Corporation Limited (NZX:SCL) today reported its FY2022 full year results. Reported NPAT Attributable to Shareholders was $19.4 million (FY2021: $26.9 million). Earnings per share for FY2022 were 13.7 cents per share (FY2021: 19.1 cents per share).

Underlying NPAT Attributable to Shareholders of $27.6 million (FY2021: $29.8 million) was towards the top end of market Guidance.

A dividend of 3.5 cents per share is being paid on 31 March 2023. This is the second instalment of the FY2022 total dividend.

• Group FY2022 financial results:
o Reported NPAT of $38.2 million, up 3 per cent (FY2021: $36.9 million)
o Underlying NPAT of $46.4 million, up 17 per cent (FY2021: $39.8 million)
o Underlying EBITDA of $77.9 million, up 6 per cent (FY2021: $73.8 million)
o Revenue of $619.2 million, up 20 per cent (FY2021: $514.6 million)
• Divisional summary:
o Further outperformance by Global Proteins, with a record result, complemented by strategic investments made in Australia
o Lockdowns in China resulted in material reductions in market prices during critical sales windows, especially during the latter parts of the season, adversely impacted Horticulture results
o Logistics continued its growth trajectory, and provided vital support to both internal and external customers

Tim Goodacre, Chair of Scales Corporation, commented: “We are pleased to report excellent Group profitability for FY2022. Global Proteins and Logistics produced outstanding results, with Horticulture dealing admirably with a number of challenges throughout the year. As ever, exceptional leadership and extraordinary effort from the Scales team were instrumental in delivering these results.”

“Our strategy of diversification has continued to prove important, with the Global Proteins division reporting significant growth, both organically and through investment. Its organic growth has been driven by strong market conditions and new product development, leading to improved volumes, mix and margin.”

“The Horticulture division was impacted by lockdowns in China together with lower volumes, higher shipping costs and labour availability. However, strong leadership and management kept the impacts of these events to a minimum.”

Andy Borland, Managing Director of Scales Corporation, stated: “Each year I am indebted to the Scales team for their effort and hard work, and this year has been no different. We were especially saddened to see the devastation caused to Hawke’s Bay during the recent Cyclone. Whilst we are very pleased to report that all of our staff are safe and well, many have experienced significant loss or disruption as a result of this event. The Hawke’s Bay community, its people, and culture, are an integral part of Scales. Accordingly, Scales is making a donation of $250,000 to the recovery. We will also be providing tailored assistance to those staff members who have been particularly affected.”

“Sustainability also plays a huge part in the future of our businesses, and we remain committed to maximise our efforts in this area and accomplish as much as we can. We have made significant strides in our Sustainability strategy and reporting this year and we look forward to sharing details of that with you in our Annual Report.”

“We were pleased to welcome our Australian partners from Fayman International and ANZ Exports (together ‘Fayman’) to the Group towards the end of the year and are excited to work with them going forward. Our financial position remains strong, with net cash at 31 December 2022 of $27.0 million, providing us with the ability to rebuild from the damage as well as to continue to invest in further growth opportunities.”

During the year Scales declared dividends of 15.5 cents per share . As previous announced, our dividend payments will be in 3 instalments this year. The first instalment, of 6.0 cps, was paid in January and we will pay the second instalment, of 3.5 cps, on 31 March 2023. We will review, and advise on, the third instalment in respect of FY2022 in early May 2023. Directors advise that the dividend policy will revert to 50 per cent to 75 per cent of Underlying NPAT Attributable to Shareholders from FY2023.

Divisions

Global Proteins

Underlying EBITDA for Global Proteins was a record $60.2 million (FY2021: $33.4 million), an increase of 80 per cent .
Mr Borland noted “Global Proteins continued to outperform expectations with its significant growth over the year. Petfood ingredient volumes sold increased by 6 per cent compared to FY2021, with revenue increasing 46 per cent over the same period.”
“The leadership and management of the division contributed to the division’s performance, underlined by strong, long term customer relationships built on trust and a track-record of consistent delivery of our high quality ingredients. Operational improvements, new products and changes in mix, together with a 2-month contribution from Fayman, also supplemented the division’s growth.”

“We continue to believe there is significant opportunity within the proteins market and we have global growth aspirations for the division over the short to medium term.”

Horticulture

The Horticulture division produced an Underlying FY2022 EBITDA of $17.0 million (FY2021:
$40.8 million).

Mr Borland commented “FY2022 was a very challenging year for the Horticulture division as well as the overall horticulture industry. In addition to adverse weather at the start of the season, earnings and volumes were impacted by lockdowns in China, particularly during critical sales windows including during the latter parts of the season. Lower volumes, higher shipping costs and labour availability also contributed to the results.”

“Mr Apple’s own-grown export volume was 3,324k TCEs (FY2021: 3,651k TCEs), with both Premium and Traditional volumes decreasing compared to the prior year. However, demand for Premium varieties remained strong. Overall prices were affected by the slow sales rates, although encouragingly many Premium prices were in line with, or slightly above, the prior year, substantiating our strategy of investing in Premium varieties.”

“Progress was made on Mr Apple’s Whakatu packhouse automation programme together with the ongoing orchard redevelopment programme. However, taking into account the effects of Cyclone Gabrielle, future investment will be prioritised towards other projects both within the Horticulture and Global Proteins divisions.”

Logistics

Logistics also delivered a record Underlying EBITDA, of $6.6 million (FY2021: $4.9 million), an increase of 33 per cent.
Mr Borland stated “Logistics experienced significant growth in airfreight volumes, which offset a small decline in ocean freight volumes, partly due to lower horticultural production. An excellent increase in profitability was also accompanied by a 51 per cent increase in revenue.”

“Once again, Scales Logistics proved its ability to navigate complex supply-chain disruptions to ensure timely delivery of perishable products to its customers, and the skill and expertise of the Logistics team remains a key advantage for both internal and external freight customers.”

Outlook

Mr Goodacre noted: “As previously advised, due to the wide ranging impacts of Cyclone Gabrielle on Hawke’s Bay, we have withdrawn our FY2023 profit Guidance at this time. However, we expect to provide updated Guidance as soon as practicable once the financial impacts of the cyclone are fully understood.”

“As we embark on our journey to restore our orchards following the effects of Cyclone Gabrielle, I would like to offer my heartfelt thanks and appreciation to the efforts of the each and every Scales team member. Their dedication and commitment is remarkable, and Scales would not be the Group it is without them.”

[bull....]

no forecast provided suggests downgrades to next fin yr to come

[Sideshow Bob]

no forecast provided suggests downgrades to next fin yr to come

Difficult when only 2 months into the year. I see in their presentation 3 orchards extensively damaged, 1 moderate damage and 6 unscathed.

Global proteins seem the key driver currently......

[Sideshow Bob]

Directors buying

https://www.nzx.com/announcements/407618

[Leemsip]

Im buying....

Couple of huge one offs for this company. COVID had a huge impact on prices received and cost (transport etc) paid. Cyclone damage going to hurt for a few years.
Happy to buy and hold this one and wait for better times.

[bull....]

hitting new low's

the apple situation must be worse than feared :scared:

[777]

hitting new low's

the apple situation must be worse than feared :scared:


Half that drop is the dividend today.

[nztx]

Im buying....

Couple of huge one offs for this company. COVID had a huge impact on prices received and cost (transport etc) paid. Cyclone damage going to hurt for a few years.
Happy to buy and hold this one and wait for better times.

Roger that .. signal is loud and clear :)

[Leemsip]

If I was happy buying at $3.40 I must love it at $2.80 amirite?

Re-listened to the earnings and cyclone update call. Company seems pretty chill about the cyclone damage to 1/3 of their orchards. They noted the trees arent insured, so may have to replant 300 odd hectares. Petfood stuff going gang busters and anticipate growing revenue in the future.

Gives me a lot of confidence.

Still falling though and Im down 20%

Hard to analyse prospects for the orchards as their hasnt been another update.

Any thoughts?

[Ricky-bobby]

Hey mate, I was up in HB last week and the apple orchards were really affected. A lot of apple land is low lying. Not sure about contamination as well… if they have to replant it would take around 5-6 years to get to full production, but hopefully they don’t have to do a lot of this… just the hit of a missed crop this year + clean up costs. the pet food side of their business is def a big plus! They are also a smart and highly regarded board, they will come through this!

[Lola]

Hey mate, I was up in HB last week and the apple orchards were really affected. A lot of apple land is low lying. Not sure about contamination as well… if they have to replant it would take around 5-6 years to get to full production, but hopefully they don’t have to do a lot of this… just the hit of a missed crop this year + clean up costs. the pet food side of their business is def a big plus! They are also a smart and highly regarded board, they will come through this!

Don’t see any of the Board on deck with shovels or driving a bobcat. Sorry but thems
the skills they need to get through this disaster.

[Ricky-bobby]

Don’t see any of the Board on deck with shovels or driving a bobcat. Sorry but thems
the skills they need to get through this disaster.

That’s not a job of a board. Plus u might be surprised, some could be.

[Sideshow Bob]

Hey mate, I was up in HB last week and the apple orchards were really affected. A lot of apple land is low lying. Not sure about contamination as well… if they have to replant it would take around 5-6 years to get to full production, but hopefully they don’t have to do a lot of this… just the hit of a missed crop this year + clean up costs. the pet food side of their business is def a big plus! They are also a smart and highly regarded board, they will come through this!

3 of their orchards extensively damaged, 1 moderate and 6 with no significant damage around Hastings.

[Ricky-bobby]

3 of their orchards extensively damaged, 1 moderate and 6 with no significant damage around Hastings.

Thanks sideshow. Did they state if they can get a crop off these blocks?..

[Sideshow Bob]

Thanks sideshow. Did they state if they can get a crop off these blocks?..

No - this was off the results presentation 23/2/23, so a month ago now. I would think those "extensively damaged" would be wiped out for crops.

Page 32 - http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SCL/407177/389221.pdf

[Leemsip]

Seems like the crops will be wiped for the 300 hectares affected. Likely to have to replant as well.

Some good questions which werent answered on the earnings call
- will you just drop the leases on the impacted orchards (didnt know yet)
- are the trees ruined (didnt know)

The bulk of the earnings of SCL is mostly down to the petfood/protein business, with the apples being something with potential post covid upside (once freight, energy and labor costs normalise). I think the big question isnt on the cyclone or the apples, its how long can the excess profits of the petfood/proteins business be maintained...... I dont expect ot be able to answer this in any way other than the CEO said they expect profts to be same in 2023 as 2022 and they are expanding....

I think Im a buyer for more... will wait till the knife stops falling for a bit...

[Sideshow Bob]

Seems like the crops will be wiped for the 300 hectares affected. Likely to have to replant as well.

Some good questions which werent answered on the earnings call
- will you just drop the leases on the impacted orchards (didnt know yet)
- are the trees ruined (didnt know)

The bulk of the earnings of SCL is mostly down to the petfood/protein business, with the apples being something with potential post covid upside (once freight, energy and labor costs normalise). I think the big question isnt on the cyclone or the apples, its how long can the excess profits of the petfood/proteins business be maintained...... I dont expect ot be able to answer this in any way other than the CEO said they expect profts to be same in 2023 as 2022 and they are expanding....

I think Im a buyer for more... will wait till the knife stops falling for a bit...

Some of the future/impact of Gabrielle and the affected orchards will take some time to work through. But undoubtedly a lag for these orchards to be reproductive again. Expect some sort of update once this is known.

Petfood - It doesn't really split out where they make their money. Seems like Shelby has been a good buy, and must be responsible for a good part of this? JV with Alliance - although surely other companies can't like supplying Meateor and into a 50% shareholders that they are competing in the field with?? Understand petfood markets are taking a breather at the moment - economic issues, inflation, consumers trading down etc.

But they have got some good initiatives going - building a plant in Australia and "active discussions to build a presence in the European market". There is still plenty of investment going into the pet sector worldwide - and I think raw material supply will be crucial in the future.

Can't also under-estimate the impact of the lower dollar.

Logistics makes a solid contribution. Expect to continue on the back of higher sea/air rates. Although possibly shipping less of their own product.

Still trading at a PE at a shade under 21.....;)

[Airw0lf]

Seems like the crops will be wiped for the 300 hectares affected. Likely to have to replant as well.

Some good questions which werent answered on the earnings call
- will you just drop the leases on the impacted orchards (didnt know yet)
- are the trees ruined (didnt know)

The bulk of the earnings of SCL is mostly down to the petfood/protein business, with the apples being something with potential post covid upside (once freight, energy and labor costs normalise). I think the big question isnt on the cyclone or the apples, its how long can the excess profits of the petfood/proteins business be maintained...... I dont expect ot be able to answer this in any way other than the CEO said they expect profts to be same in 2023 as 2022 and they are expanding....

I think Im a buyer for more... will wait till the knife stops falling for a bit...

Potential dividend yield looks good at current prices...yes the dividends will be down short term but should recover eventually?

[Leemsip]

I would be interested to know the capital requirements for the replanting... Might soak up a lot of cash over the next year or so.

But yes seems like a short term setback for a company which is generally going the right way.

[Pegasus2000]

Director Nick Harris bought 50k shares at price 2.86 on March 23rd.

[Paint it Black]

I would be interested to know the capital requirements for the replanting... Might soak up a lot of cash over the next year or so.

But yes seems like a short term setback for a company which is generally going the right way.

To me a key question is the risk of another Gabrielle before the stop banks etc are repaired/improved? No point replanting if the likelihood of reoccurring in say next 10 years before the stop banks are raised is more than 20%. Just chucking numbers around for comment?

[kiora]

I would be interested to know the capital requirements for the replanting... Might soak up a lot of cash over the next year or so.

But yes seems like a short term setback for a company which is generally going the right way.

Good question

$150,000/ha???

[Leemsip]

$45m (300 hect * 150k) !

Anyway bought some more today.

[Pegasus2000]

$619.2m this year so 7.2% dent!


$45m (300 hect * 150k) !

Anyway bought some more today.

[Airw0lf]

Director Nick Harris bought 50k shares at price 2.86 on March 23rd.

Yes that's a good point - I think another director and/or senior manager also bought recently. Good sign.

[Sideshow Bob]

https://www.nzx.com/announcements/409624

MARKET UPDATE AND FY23 REVISED GUIDANCE
The Directors of Scales Corporation (NZX:SCL) advise that Guidance for FY23 Underlying Net Profit after Tax Attributable to Shareholders has been reinstated at $14.0m to $19.0m. This follows both an assessment of the impact of Cyclone Gabrielle and a review of trading forecasts in all Group businesses.

The impact of the Cyclone will be long felt in Hawke’s Bay and we will continue to be focused on the health, safety and wellbeing of our staff, their families and the wider community. Part of our response to the Cyclone is the commitment to a $250,000 donation to the recovery.

A significant amount of work is going into the clean-up and remediation of our affected orchards and we are indebted to our teams for this effort. We also appreciate the cyclone recovery funding provided by the government to assist in this work. A priority focus in the orchards has been on the removal of flood-carried silt from around trees.

With regard to the specific impact on Mr Apple’s crop and orchards, we can now advise the following:

• Our current indications are that our FY23 crop will be down approximately 25% on our initial forecast for the year;
• We estimate that the total tree losses across owned and leased orchards at approximately 5% of our total planted orchard area. Of this area, due to expiring leases on some of the orchards, less than 50% will need to be replaced;
• Subject to any further tree mortality resulting from the impact of silt deposits, which will become more evident at bud burst in spring, we estimate that the total cost of replanting will be no higher than our usual redevelopment capex programme;
• Going forward, crop expectations in future years should only be impacted to the extent of replanting the above tree losses and relinquishing of orchard leases;
• As a result of prior year operating results, Mr Apple has been constantly reviewing the overall apple business with a view to further increasing the focus on premium apples to the Asia and Middle East market. The impact of Cyclone Gabrielle provides an opportunity to further realign varieties and volumes to this strategy. We continue to be very positive about returns from this strategy and note that early demand and pricing for our branded varieties in the market has been strong.

In providing updated Guidance for FY23, Directors note:

• Horticulture:
o The FY23 apple crop is 50% picked and 12% sold;
o Sales pricing is assumed to be generally consistent with 2021’s levels;
o No change has been made to our estimate of shipping costs although it is noted that lower volumes nationally should improve freight logistics and costs;
o All known Cyclone impacts, including clean-up costs have been factored into the result at their currently expected levels.

• Global Proteins:
o As noted in our Annual Report released last week, early trading for FY23 has been encouraging and our current initiatives are all making positive progress. Although the timing of new developments will have some impact on current year trading results, we remain very positive about the division’s prospects for 2024 and future years.

• Logistics;
o The business will be impacted by crop losses in horticulture and the wider agriculture industry.

[winner69]

After all the chaos expected profit of 18m in F23 pretty good ….only down 33% on F22 of 27m

[Ricky-bobby]

After all the chaos expected profit of 18m in F23 pretty good ….only down 33% on F22 of 27m

25% down in crop is pretty impressive. Been a hell of a season for them…. Be interesting to see if quality is affected?

[mshierlaw]

Test of character today .... got the result early, checked the numbers made my evaluation to buy some more.

Then there was a 10c spread between buy & sell 305 to 315 so I sat on my hands hoping for a couple of cents less per share, the wave rapidly passed my bid by.

Note to self - make a decision & back yourself it's the correct one. :(

[Leemsip]

I like to buy on the upswing, who cares about a couple of percent if you th8nk its a conviction hold. In at $3 last week and $3.25 today.... earlier knife catching at $3.50. Fully tanked up now to max.

[nztx]

Mr Scales .. you done it again :)

Not a lot to not like about this company :)

[Leemsip]

Volume is pretty low this morning. With $10k you could drive the stock to $42 per. 15 bagger mate. Anyone keen?

14534

[BlackPeter]

Volume is pretty low this morning. With $10k you could drive the stock to $42 per. 15 bagger mate. Anyone keen?

14534

I assume you realise that a) not all orders are visible and b) the brokers are required to maintain an orderly market.

If you put your $10,000 order into the market I am sure that you would fill it for below $4; Just try :) - however, no promises that you can sell afterwards your new shiny shares with a gain ...;

[Leemsip]

I didnt know they arent all visible... interesting. Makes sense

[Sideshow Bob]

Decided to pay a final divvy - 9.5c fully imputed.

https://www.nzx.com/announcements/410690

[Leemsip]

Statement of confidence from the company. Cyclone not the issue we thought it was?

[BlackPeter]

Statement of confidence from the company. Cyclone not the issue we thought it was?

Maybe it was not such a big issue for Scales some people thought it was ...

[bull....]

bit dis-appointing they paying a div instead they should be re-investing monies to rebuild and grow the business

[whatsup]

Interesting writeup in the N Z Herald today, not all doom and gloom, see what punters think !

[Sideshow Bob]

Go ex-dividend on Wednesday next week.

[Sideshow Bob]

https://www.nzx.com/announcements/416068

SCALES CORPORATION ANNOUNCES INVESTMENT IN PETFOOD INGREDIENT BUSINESS IN EUROPE

Scales Corporation Limited (NZX:SCL) today announced it had finalised an agreement to expand its Global Proteins division through the subscription for a 50% shareholding in a newly established petfood ingredient processing operation, Esro Petfood BV.

This joint venture will be based in Europe alongside Esro Food Group (‘Esro’). Esro is a key player in Europe’s animal by-product processing, with factories in The Netherlands, Belgium and Spain. Esro has the ambition to diversify its activities from solely edible products to include petfood ingredients. Esro is owned by the Netherlands based Rooijackers family, the Fayman family (who Scales invested alongside last year in their Australian business) and Rabobank Investment, the investment franchise of Rabobank.

Scales is providing lending facilities for a combined €15 million to fund capital expenditure for two petfood ingredient processing plants in Europe. This investment will be funded initially from Scales’ existing cash reserves. Scales and Esro have appointed Leon Coolen to be CEO of the joint venture. Mr Coolen has extensive experience in leading global food and petfood ingredients businesses. Scales will also have two directors on the board of the joint venture.

Managing Director Andy Borland says “We are very pleased to be partnering with Esro to expand our Global Proteins division into the European market. We are also very pleased to be expanding our relationship with the Fayman family and developing new relationships with the Rooijackers family and Rabobank Investment, both of whom have strong networks in Europe. We look forward to continuing to explore and uncover new market opportunities using our complementary knowledge and expertise.”

“Esro is an established and respected business with a long history of processing and selling edible by-products. We are excited to be able to combine Esro’s existing processing and procurement strength with Scales’ specialist knowledge of the petfood industry to be able to offer our petfood customers a truly global solution for their ingredient procurement requirements.”

“Esro Petfood BV will be headquartered in The Netherlands. Its first plant will be based in Belgium, where an existing processing facility that was previously used by Esro for edible by-product processing, is being converted to a dedicated petfood ingredient plant. Construction of the new plant is underway and we expect the site to be operational in the last quarter of 2023. The joint venture is also considering options for a second site, but a final decision on this is unlikely prior to 2024.”

“These new European petfood ingredient plants complement the existing petfood ingredients businesses Scales and our shareholding partners operate in the USA, NZ and Australia.”

Esro CEO Joris Rooijackers said “we are delighted to have a strong partner like Scales, who has extensive experience and a strong reputation in the petfood market. Now that we have joined forces, we are convinced that this business can make a strong contribution to our operating result in the future”.

Mike Petersen, Chair of Scales Corporation said “this investment continues to demonstrate our commitment to Global Proteins, both in terms of expanding our geographical reach as well as the range of products that we are able to supply.”

“This investment is unlikely to have any impact on earnings until the plant has completed the necessary approvals and is operating seamlessly at full capacity. Accordingly, the Board does not anticipate a positive impact on earnings until part way through the 2024 financial year.”

[RTM]

Good to see.

They are not sitting on their hands feeling sorry for themselves !


https://www.nzx.com/announcements/416068

SCALES CORPORATION ANNOUNCES INVESTMENT IN PETFOOD INGREDIENT BUSINESS IN EUROPE

Scales Corporation Limited (NZX:SCL) today announced it had finalised an agreement to expand its Global Proteins division through the subscription for a 50% shareholding in a newly established petfood ingredient processing operation, Esro Petfood BV.

This joint venture will be based in Europe alongside Esro Food Group (‘Esro’). Esro is a key player in Europe’s animal by-product processing, with factories in The Netherlands, Belgium and Spain. Esro has the ambition to diversify its activities from solely edible products to include petfood ingredients. Esro is owned by the Netherlands based Rooijackers family, the Fayman family (who Scales invested alongside last year in their Australian business) and Rabobank Investment, the investment franchise of Rabobank.

Scales is providing lending facilities for a combined €15 million to fund capital expenditure for two petfood ingredient processing plants in Europe. This investment will be funded initially from Scales’ existing cash reserves. Scales and Esro have appointed Leon Coolen to be CEO of the joint venture. Mr Coolen has extensive experience in leading global food and petfood ingredients businesses. Scales will also have two directors on the board of the joint venture.

Managing Director Andy Borland says “We are very pleased to be partnering with Esro to expand our Global Proteins division into the European market. We are also very pleased to be expanding our relationship with the Fayman family and developing new relationships with the Rooijackers family and Rabobank Investment, both of whom have strong networks in Europe. We look forward to continuing to explore and uncover new market opportunities using our complementary knowledge and expertise.”

“Esro is an established and respected business with a long history of processing and selling edible by-products. We are excited to be able to combine Esro’s existing processing and procurement strength with Scales’ specialist knowledge of the petfood industry to be able to offer our petfood customers a truly global solution for their ingredient procurement requirements.”

“Esro Petfood BV will be headquartered in The Netherlands. Its first plant will be based in Belgium, where an existing processing facility that was previously used by Esro for edible by-product processing, is being converted to a dedicated petfood ingredient plant. Construction of the new plant is underway and we expect the site to be operational in the last quarter of 2023. The joint venture is also considering options for a second site, but a final decision on this is unlikely prior to 2024.”

“These new European petfood ingredient plants complement the existing petfood ingredients businesses Scales and our shareholding partners operate in the USA, NZ and Australia.”

Esro CEO Joris Rooijackers said “we are delighted to have a strong partner like Scales, who has extensive experience and a strong reputation in the petfood market. Now that we have joined forces, we are convinced that this business can make a strong contribution to our operating result in the future”.

Mike Petersen, Chair of Scales Corporation said “this investment continues to demonstrate our commitment to Global Proteins, both in terms of expanding our geographical reach as well as the range of products that we are able to supply.”

“This investment is unlikely to have any impact on earnings until the plant has completed the necessary approvals and is operating seamlessly at full capacity. Accordingly, the Board does not anticipate a positive impact on earnings until part way through the 2024 financial year.”

[Sideshow Bob]

I haven't looked at their balance sheet lately, but going back over the years they've sold Polarcold, Liqueo and also 50% of Meateor NZ to Alliance - with I think their only major acquisition or investment being Shelby in the US??

Good to see them investing further in pet.

[percy]

At December 2022 their cash position was $27mil.
They look to greatest growth in pet food.From their agm presentation.
[SLIDE 26: GLOBAL PROTEINS – WHAT WE LIKE ABOUT THE GLOBAL PROTEINS INDUSTRY]
I’d now like to touch on the future of the Global Proteins division, as we’re very optimistic about its prospects.
We’ve summarised the attributes of the division on the current slide, which includes resiliency against market cycles
as well as above-average returns on investment. The worldwide nature of the opportunities also allows us to leverage
our existing networks, with our current focus being towards North America.
The industry is supported by many macro tailwinds including the global growth of the middle class and its associated
demand for protein. We see no abatement in the demand for protein for the foreseeable future.
Our petfood customers are also particularly optimistic about the future, and are investing substantial sums to meet
future demand.
Supply chains and sourcing of raw materials have been identified as the biggest future production challenges for
petfood manufacturers. Meateor and Shelby have a very experienced and well-connected leadership team and have
developed deep relationships with customers over 25 years, which gives us confidence we will participate alongside
our customers in this growth.
[SLIDE 27: GLOBAL AMBITIONS]
As a result of the opportunities I’ve just described, we have global ambitions for the division.
As shown on this slide, we already have significant operations in New Zealand, Australia and North America. North
America is the world’s largest petfood market, with Europe being the second largest. As many of our existing customers
operate in Europe, we’re continually looking for ways to extend our operations there. As a result, discussions regarding
potential opportunities are currently taking place.
[

[Sideshow Bob]

Nice one Percy. Clearly signaled.

[Ricky-bobby]

Yep good move I recon. Talking to an Jarden analyst a couple months back, she said anything pet was all the rage and where a lot of action was.

[Sideshow Bob]

Yep good move I recon. Talking to an Jarden analyst a couple months back, she said anything pet was all the rage and where a lot of action was.

Starting to flatten off now - cost of living, inflation, competition, return to the office etc etc and now seeing consumers trading down. Been a bull-run in many ways.

Probably the peak was when Ziwi sold for $1.5b to PE.

But in the end, these guys can't do anything without raw material.....will cats & dogs eat artificial meat? Dunno. And it isn't like manufacturing petfood out of prime cuts - it is residual product that typically isn't consumed by humans and is at the lower end of the price scale that artificial meat might not be able to afford service...??

[Sideshow Bob]

https://www.nzx.com/announcements/416859

Highlights – 6 months to 30 June 2023 (1H23)
• Underlying NPAT Attributable to Shareholders of $14.5 million (1H22: $25.6 million), down 43.5%
• Reported NPAT of $14.3 million (1H22: $35.1 million), down 59.3%
• Excellent performance by the Global Proteins division
• Commendable Horticulture operational result in light of the effects of Cyclone Gabrielle
• Solid result from Logistics despite volumes also being affected by the Cyclone

[Leemsip]

https://www.nzx.com/announcements/416859

Highlights – 6 months to 30 June 2023 (1H23)
• Underlying NPAT Attributable to Shareholders of $14.5 million (1H22: $25.6 million), down 43.5%
• Reported NPAT of $14.3 million (1H22: $35.1 million), down 59.3%
• Excellent performance by the Global Proteins division
• Commendable Horticulture operational result in light of the effects of Cyclone Gabrielle
• Solid result from Logistics despite volumes also being affected by the Cyclone

I am a little disappointed by the proteins division flat EBITDA. Company keeps talking this up as the growth engine etc etc. Otherwise happy with the results, horticulture should bounce back next year.

[Leemsip]

Still a promising company. Growth in proteins, horticulture should have a good year in 24. This is my biggest holding.

[Sideshow Bob]

Looking like it will go sub $3's. In recent times it was only through Cyclone Gabrielle that it got below $3....

[kiora]

"Hawke's Bay orchardists waiting to see if their trees will burst into life, or die after cyclone"
https://www.stuff.co.nz/business/farming/agribusiness/132886975/hawkes-bay-orchardists-waiting-to-see-if-their-trees-will-burst-into-life-or-die-after-cyclone?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Tuesday+12+ September+2023

[Filthy]

from NPH results today: “Several major apple exporters suffered less permanent flood damage to their trees than initially thought and replanting of damaged areas is already underway or complete. Continued investment in the region’s apple industry underscores the value of the cargo and the positive long-term outlook for volume growth across Hawke’s Bay’s horticulture sector".

[Leemsip]

I have a very basic model for this company. SCL roughly has 4 divisions.
- proteins where most of the money comes from ~$60m EBITDA
- hort which used to make a regular $40m EBITDA in 2020 and 2021 but has been crushed by the cyclone to zeroish.
- logistics just ticks in at $4m or so outside of COVID
- corp which is about a $6m cost.

So modelling this out for 2024.
- If EBITDA for their proteins div stays at the elevated $60m, hopefully this is the case and wasnt a one off COVID bump. I simply dont have anything to go on here other than prev years. H1 results was $30m so looking good.
- hort bounces back in 24 and gets a somewhat normal year in (less the damaged crops) so $30-$35m EBITDA. From company announcements I dont see why this would be worse. This is the key bit. Is the hort division f#cked or not. The recent announcement https://scalescorporation.co.nz/wp-content/uploads/2023/08/2023-Interim-Results-presentation.pdf
says damage pretty minor, and they can push through.
- logistics has a small profit $4m. H1 was $2.7 so looking good.
- corp costs up $1m to $7m cos inflation. H1 was $2.7m so looking good.
Company has $90m EBITDA, less $20m depreciation and amort = $70m EBIT

$8m interest bill (on $67m debt)
= $62m EBT
$20m tax in round numbers
$40m NPAT on a $437m company. So a PE of 11, and they are talking about growth in the proteins division taking off and investing more. Borrowings of $70m, so not huge. Balance sheet is fine. Management are super steady and good operators.

Whats not to like here people? I reckon its worth $4.50ish (which is the lower end of the pre-cyclone value), so 50% upside. Should see a rerate in the next 8 months once they signal all clear in the hort division in June 24. Not impacted by any NZ recession either as most of the fruit heads offshore.

[Sideshow Bob]

Their protein markets (ie petfood) are under some pressure and market conditions are difficult currently. In the US, pet ownership is down, effects of inflation both here and in market, interest rates, consumer spending, return to the office and then much of the US petfood production goes to China - which has slowed also. There is still some unwinding of supply chains and stock post-Covid.

Other proteins are having their ups and downs. Lamb would be a big one for Scales, and plenty of raw material out of Oz. Not sure if their new plant in Melbourne is operating yet?? (I think next year??)

No doubt Scales benefit from their growing in-market presence and more vertical integration with the operations in the US, EU etc.

Just think given market conditions, just might be in for a more challenging year.

[Leemsip]

yeah agree the proteins might struggle a bit. I cant get my head around why the gross margin is so high, so may be temporary.

Anyway my money is where my mouth is in SCL

[Sideshow Bob]

https://www.nzx.com/announcements/423143

MARKET UPDATE

2023 TRADING

The directors of Scales Corporation Limited (NZX:SCL) have reiterated market guidance for the twelve months to 31 December 2023, of an Underlying Net Profit after Tax Attributable to Shareholders range of $14.0 million to $19.0 million.

Managing Director Andy Borland notes “2023 has been a very challenging year, particularly for our Hawke’s Bay staff and the wider community, following Cyclone Gabrielle. We are very proud of the resilience shown by all of our team members in response to this event. Their ability and effort in resuming operations and remediating damaged orchards was outstanding. It is very pleasing to see the “fruits” of this work with all affected orchard area now cleared of silt and remediated, and with a promising 2024 apple crop currently on the trees.

As previously reported, Scales continues to benefit from our diversified nature and, once again this year, from the performance of the Global Proteins division. Trading has continued positively in the second half of the year, despite the impact of post-COVID rebalancing of inventories amongst petfood manufacturers.

We are particularly pleased with the expansion into the European petfood ingredients market this year, via joint venture Esro Petfood BV. This investment is further positive progress in the international expansion of the Global Proteins division and we look forward to providing further commentary on the division at the time of the 2023 results release, in February next year”.

2024 GUIDANCE

Looking ahead to the 2024 financial year, directors advise an Underlying Net Profit after Tax Attributable to Shareholders Guidance range of $30.0 million to $35.0 million.

In providing Guidance for 2024, directors note:

• The Horticulture division is forecast to return to more normal trading following the negative impact of Cyclone Gabrielle in 2023. More detail regarding Mr Apple’s trading expectations is provided below;
• In the Global Proteins division, a continued strong performance is anticipated, albeit with some proteins, in particular lamb, being affected by the inventory rebalancing noted above;
• Our most recent investments in the Global Proteins division, Meateor Australia and Esro Petfood, commenced production in 2023. The start-up nature of both of these businesses means they are not forecast to contribute positively to 2024 Group earnings;
• The Guidance range implies:
o an Underlying Net Profit after Tax range of between $47.0 million and $55.0 million; and
o an Underlying EBITDA range of between $81.0 million and $91.0 million.

DIVIDENDS

The directors have also declared a fully imputed interim cash dividend for the 2023 financial year of 4.25 cents per share, to be paid on 18 January 2024. The directors note that, in line with the current dividend policy, they would expect total dividends for 2023 to be split approximately evenly between interim and final (with the final dividend to be paid in July 2024), and that total 2023 dividends would be between 50% and 75% of Underlying Net Profit after Tax Attributable to Shareholders.

The directors also note that based on the profit guidance for 2024, it is expected that dividends paid in respect of 2024 would be higher than that likely for 2023.

Lastly, due both to the increasingly offshore nature of the Group’s earnings and the impact of Cyclone Gabrielle on the Horticulture divisions earnings this year, it is likely that dividends after the 2023 year will be partially, rather than fully, imputed.

MR APPLE UPDATE

Whilst Cyclone Gabrielle took a significant toll on orchard production for the 2023 season, we are pleased to report that damage extending beyond the 2023 season is limited.

Total planted orchard area is currently 1,100 hectares, which is approximately 5% below the total area at the same time last year. The reduction in planted area relates to cyclone damage that has yet to be replanted and relinquished orchard leases. Assuming a return to normal levels of production, current indications are for a crop of approximately 3.4 million export TCEs in 2024.

Our PVRs DazzleTM and PosyTM continue to perform strongly through the Asia markets and we have taken the opportunity to accelerate development of both of these varieties during 2023. We are very pleased with how they are performing and look forward to increased sales volumes becoming available as historical plantings continue to mature. The business is also expected to benefit in 2024 from favourable tailwinds in foreign exchange rates and shipping prices.

[winner69]

Good eh Bob

Next years profits could double …that’s pretty good.

Share price should head back to 5 bucks or more ……they did say back to normal

[Sideshow Bob]

Good eh Bob

Next years profits could double …that’s pretty good.

Share price should head back to 5 bucks or more ……they did say back to normal

Helps if you don't have a cyclone, or El Nino or some other weather event......

[GTM 3442]

A little bit of good news to start the day - or to end the year?

https://www.nzx.com/announcements/423143

[Leemsip]

Mid-point of the forecast NPAT puts us on a P/E of 13 or 14. Not bad, but not a screaming bargain either. Just a solid business puttering along, with some growth in the proteins bit. Not expecting any big moves from this announcement, just confirmation they are doing ok.

Im a little disappointed in the 24 guidance TBH.
Also super confused about the non-controlling interests here taking 40% of the NPAT....

[Sideshow Bob]

https://www.nzx.com/announcements/426615

COMMENDABLE GROUP PERFORMANCE IN A DISRUPTED YEAR

Highlights – 12 months to 31 December 2023

Diversified agribusiness group Scales Corporation Limited (NZX:SCL) today reported its FY2023 full year results. Reported NPAT Attributable to Shareholders was $5.2 million (FY2022: $19.4 million). Reported earnings per share for FY2023 were 3.7 cents per share (FY2022: 13.7 cents per share).

Underlying NPAT Attributable to Shareholders of $19.0 million (FY2022: $27.6 million) was at the top end of market guidance.

Underlying earnings per share for FY2023 were 13.4 cents per share (FY2022: 18.3 cents per share).

• Group FY2023 financial results:
o Underlying NPAT of $38.4 million, down 17 per cent (FY2022: $46.4 million)
o Reported NPAT of $24.7 million, down 35 per cent (FY2022: $38.2 million)
o Underlying EBITDA of $67.5 million, down 13 per cent (FY2022: $77.9 million)
o Revenue of $565.4 million, down 9 per cent (FY2022: $619.2 million)
• Divisional summary:
o Global Proteins produced a strong performance, reflecting the ability of the division to execute its strategy and adjust to market conditions
o The Horticulture division produced an admirable result, with higher in-market prices helping to offset lower volumes caused by Cyclone Gabrielle
o Logistics generated a solid result despite the impact of lower volumes together with geopolitical tensions in key trade routes
Mike Petersen, Chair of Scales Corporation, stated: “Our diversified strategy has, once again, proved to be an important factor in our success in what was a disruptive year. This, combined with the ability of our divisions to execute their individual strategies during testing times, produced very commendable Group earnings.”

“Global Proteins and Logistics performed strongly, with Horticulture producing an admirable result, having dealt with the significant effects of Cyclone Gabrielle during the year. This is in no small part due to the skills and resilience of the entire Scales team.”
Andy Borland, Managing Director of Scales Corporation, noted: “I would also like to mention the aptitude and hard work of the Scales team. The Cyclone touched the lives of a significant number of our staff members, and many more people within our Hawke’s Bay community. To see the results of their hard work despite the adversity that they faced is testament to the strong culture that exists within the Group as a whole.”

“We continue to keep Sustainability to the forefront of our minds, and it was an important factor during the remediation of our orchards. A number of new initiatives were implemented throughout the year, and we will be pleased to share details of those with you in our Climate Related Disclosure report, which will be released in April 2024.”

“During the year we were delighted to announce the establishment of our joint venture with Esro Food Group, which has provided us with a strategically important European presence for our Global Proteins division. Significant progress has been made on this operation, with the first processing line commissioned towards the end of the year.

We continue to operate with a strong financial position, with net cash of $12.0 million as at 31 December 2023.”

During 2023, Scales paid dividends of 19.0 cents per share . Our dividend payments for FY2023 are likely to revert to 2 instalments, with the first instalment of 4.25 cents per share having been paid on 18 January 2024. We will review, and advise on, a second instalment in respect of FY2023 in early May 2024.

Divisions

Global Proteins

Underlying EBITDA for Global Proteins was $54.5 million (FY2022: $60.2 million), a decrease of 9 per cent.
Mr Borland commented ”Global Proteins delivered a solid result in a year when its petfood ingredient customers were rebalancing their inventories to lower, pre-COVID levels. This resulted in lower volumes sold. Despite these new market conditions, the division performed well, adjusting its operations accordingly.”

“Fayman delivered a pleasing first full year contribution, withits edible proteins operations complementing our petfood ingredients operations.”

“The overall expansion of the Global Proteins division is providing a strong foundation for future growth. Meateor Australia and Esro Petfood made excellent progress during the year, with both businesses operational by the fourth quarter. Whilst these businesses are currently in transitional and start-up phases respectively, we believe that these investments will be extremely strategically important for the division in the long-term.”

Horticulture

The Horticulture division produced an Underlying FY2023 EBITDA of $14.8 million (FY2022:$17.0 million), a decrease of 13 per cent.

Mr Borland observed “FY2023 was a very challenging year for the Horticulture division, as it was for the entire Hawke’s Bay horticulture industry. However, the division produced a very commendable result given the significant physical, financial and volumetric impacts of Cyclone Gabrielle.”

“Mr Apple’s own-grown export volume of 2,733k TCEs was 18 per cent down on the prior year (FY2022: 3,324k TCEs). However, Mr Apple experienced a strong finish to the season due, in part, to limited supply in key markets, which in turn contributed to higher in-market pricing.”

“Mr Apple continues to focus on the supply of Premium varieties such as DazzleTM and PosyTM to the Asia and Middle East markets, a strategy that is supported by increasing in-market prices. Development of these varieties was accelerated during 2023 and we anticipate higher sales volumes as plantings mature.”

Logistics

Logistics delivered Underlying EBITDA, of $4.3 million (FY2022: $6.6 million), a decrease of 35 per cent.
Mr Borland remarked “Ocean freight volumes for the Logistics division were impacted by a combination of Cyclone Gabrielle and geopolitical tensions in key trade routes. In addition, its airfreight volumes were, in part, affected by a slow start to the stone fruit season.”

“Notwithstanding these challenges, Scales Logistics was able to call on its supply chain experience to navigate the difficulties and ensure on-time delivery of produce for both its internal and external customers. We continue to appreciate the strategic value that the Logistics division brings to the Group.”

Outlook

Mr Petersen noted: “Whilst 2023 was a difficult year, our teams dealt with the adversity with their usual “can-do” culture. Looking forward to 2024, we anticipate a more normal year of trading, particularly for Horticulture.”

“We anticipate that our petfood customers will continue to rebalance their inventory levels to pre-COVID levels and note that Meateor Australia and Esro Petfood will continue to progress through their transitional and start-up phases respectively. We look forward to realising exciting opportunities from these key markets in the long-term.”

“Picking and packing has commenced at Mr Apple for the 2024 season and current crop indications are positive. There is also strong initial demand for our early fruit.”

“Consequently, the Board is pleased to re-confirm the FY2024 guidance of Underlying Net Profit after Tax Attributable to Shareholders of between $30.0 million to $35.0 million, implying an Underlying Net Profit range of $47.0 million to $55.0 million and an Underlying EBITDA range of $81.0 million to $91.0 million.”

Mr Petersen also commented “As I progress through my first year as Chair, I have been impressed by the tenacity and resilience of the Scales teams. On behalf of the Scales Directors and Shareholders, I would like to thank each and every Scales team member for their hard work. Without them, we would not be in the positive position that we are in.”

“I’m also delighted to advise that the Board has reappointed Andy Borland for a further 5-year term as Managing Director. Andy’s contribution to the company has been significant and we look forward to a continuation of this work for Scales Corporation in the coming years.”

[RTM]

https://www.nzx.com/announcements/428634

Interesting to browse through.

[Louloubell]

Yep, quite an upbeat report

[RTM]

Yep, quite an upbeat report

Agree, considering what they have been through. Huge volume of proteins.

[Sideshow Bob]

https://www.nzx.com/announcements/431168

SCALES ACQUIRES SELECTED ORCHARD ASSETS AND 50% OF PROFRUIT BUSINESS FROM BOSTOCK GROUP FOR $47.5 MILLION, TWO MR APPLE ORCHARDS TO BE MARKETED FOR SALE

Scales Corporation Limited (NZX:SCL Scales) today announced that it has entered into an agreement to acquire certain assets from Bostock Group Limited (Bostock). The transaction includes approximately 240 hectares of planted orchard area comprised of approximately 114 hectares of owned orchards and the assignment of approximately 126 hectares of leased orchard. The total acquisition price of $47.5m also includes the purchase of 50% of Profruit (2006) Limited (Profruit) held by Bostock (collectively the Transaction).

At the same time Mr Apple will put up for sale its Blyth and Te Papa orchards (with a combined planted area of approximately 186 hectares) as part of Scales’ strategy to improve Mr Apple’s margins. By acquiring the Bostock orchards and selling these existing orchards, Mr Apple will broadly maintain its total orchard area while achieving a meaningful uplift in its premium variety volumes.

The key highlights of the Transaction include:
• Approximately 240 hectares of planted orchard, comprising the acquisition of approximately 114 hectares of owned orchard and assignment of approximately 126 hectares of leased orchard.
• Strong geographical alignment to existing Mr Apple orchards and its post-harvest infrastructure.
• High concentration of DazzleTM plantings. Approximately 110 hectares (of approximately 240 hectares) are planted in DazzleTM.
• Acquired orchards also include High-Colour Fuji and Royal Gala plantings.
• Profruit to become a wholly-owned subsidiary of Scales.
• Mr Apple’s total orchard area is expected to be largely unchanged through time following the proposed orchard acquisition and sales.
• Premium fruit is expected to represent nearly 80% of Mr Apple’s 2025 fruit sales (compared with 64% in 2023).

Scales Corporation’s Managing Director, Andy Borland, says “We are extremely pleased to announce our transaction with John Bostock today. Scales and Mr Apple have worked closely with John Bostock and his team over multiple decades and expect to continue to work closely together to collectively grow the industry. Bostock orchards are renowned for their premium quality produce and the orchards being transferred are optimally located, with strong strategic alignment to existing Mr Apple orchards.”
“Scales recognises the hard-work and dedication of both the Mr Apple and Bostock teams. Both businesses have operated at the pinnacle in their field. The Hawke’s Bay community has had a challenging few years and we are hopeful that the increased value to be unlocked through this Transaction creates opportunities for new roles across the industry.”

“Our Mr Apple strategy is to focus on the sale of premium varieties to Asia and the Middle East markets, and drive improved margins from Mr Apple’s existing level of assets employed rather than expanding its asset base. The transactions announced will achieve those objectives. DazzleTM has been a highly successful variety for Mr Apple, and this transaction materially accelerates our strategy of increasing DazzleTM volumes. By inheriting mostly mature blocks we will have higher volumes of DazzleTM apples from 2025”.

Bostock Group Limited’s Managing Director, John Bostock, says “I am especially pleased that Scales is acquiring these orchards. The distinction between ‘organic’ and ‘conventional’ fruit is of a lower significance in Asia, where DazzleTM has strong market appeal. It is a natural fit for these orchards to be operated by Mr Apple and for the Bostock group to continue to service its customers in other markets with Bostock’s other varieties. There is a strong cultural alignment between our two businesses, and I feel confident that any staff moving between the growers will find themselves well at home at Mr Apple.”

Scales Corporation Chair, Mike Petersen, says “migrating our orchard mix to favour higher percentages of premium varieties, especially those varieties for which we have proprietary rights, is a core strategic imperative for Mr Apple as well as New Zealand’s broader horticultural industry. PVR varieties, such as DazzleTM, are more sought after than our traditional varieties, reflecting the superior colour qualities and eating experience. This allows the industry to continue to invest, innovate and expand whilst also creating high-value employment opportunities. Profruit is an extremely well-run business and we are very pleased to move to outright ownership.”

The Transaction is subject to customary closing conditions and expected to complete in early to mid-June 2024, while the Mr Apple orchard sales are not expected to conclude until the second half of the year. The Transaction and orchard sales are expected to have a negligible impact on Scales’ Net Profit After Tax Attributable to Shareholders for 2024 (the first full year of production from the affected orchards will not be until 2025). Further details on earnings are expected to be provided at or about the time of Scales’ half-year results announcement (late August), following confirmation of the outcome of the proposed orchard sales.

[percy]

Scales already owned 50% of Profruit,therefore they will now own 100%.

[Filthy]

might finally be about to jump out of its 12-month trading range. a few more buyers around & just starting to pop its head above $3.40, - a good sign!

[Leemsip]

Agree Filth. $3.40 is a bit of a barrier and hopefully we get through it.

The horticulture revenue should bounce back this year big time. My model (which has been badly wrong previously but I keep tweaking it towards reality), reckons NPAT to shareholders @ around $40m this year and growing slowly...
P/E of 11 or so.... so sweet little company. I reckon its more a $4 stock or $4.50...

[Sideshow Bob]

With their Meateor NZ business, 50% owned by Alliance - who have a few 'issues' currently.

Just wonder if this 50% comes on the market at some stage??

[Sideshow Bob]

Global Proteins preso.

https://api.nzx.com/public/announcement/432438/attachment/420352/432438-420352.pdf

[Ricky-bobby]

https://www.nzx.com/announcements/431168

SCALES ACQUIRES SELECTED ORCHARD ASSETS AND 50% OF PROFRUIT BUSINESS FROM BOSTOCK GROUP FOR $47.5 MILLION, TWO MR APPLE ORCHARDS TO BE MARKETED FOR SALE

Scales Corporation Limited (NZX:SCL Scales) today announced that it has entered into an agreement to acquire certain assets from Bostock Group Limited (Bostock). The transaction includes approximately 240 hectares of planted orchard area comprised of approximately 114 hectares of owned orchards and the assignment of approximately 126 hectares of leased orchard. The total acquisition price of $47.5m also includes the purchase of 50% of Profruit (2006) Limited (Profruit) held by Bostock (collectively the Transaction).

At the same time Mr Apple will put up for sale its Blyth and Te Papa orchards (with a combined planted area of approximately 186 hectares) as part of Scales’ strategy to improve Mr Apple’s margins. By acquiring the Bostock orchards and selling these existing orchards, Mr Apple will broadly maintain its total orchard area while achieving a meaningful uplift in its premium variety volumes.

The key highlights of the Transaction include:
• Approximately 240 hectares of planted orchard, comprising the acquisition of approximately 114 hectares of owned orchard and assignment of approximately 126 hectares of leased orchard.
• Strong geographical alignment to existing Mr Apple orchards and its post-harvest infrastructure.
• High concentration of DazzleTM plantings. Approximately 110 hectares (of approximately 240 hectares) are planted in DazzleTM.
• Acquired orchards also include High-Colour Fuji and Royal Gala plantings.
• Profruit to become a wholly-owned subsidiary of Scales.
• Mr Apple’s total orchard area is expected to be largely unchanged through time following the proposed orchard acquisition and sales.
• Premium fruit is expected to represent nearly 80% of Mr Apple’s 2025 fruit sales (compared with 64% in 2023).

Scales Corporation’s Managing Director, Andy Borland, says “We are extremely pleased to announce our transaction with John Bostock today. Scales and Mr Apple have worked closely with John Bostock and his team over multiple decades and expect to continue to work closely together to collectively grow the industry. Bostock orchards are renowned for their premium quality produce and the orchards being transferred are optimally located, with strong strategic alignment to existing Mr Apple orchards.”
“Scales recognises the hard-work and dedication of both the Mr Apple and Bostock teams. Both businesses have operated at the pinnacle in their field. The Hawke’s Bay community has had a challenging few years and we are hopeful that the increased value to be unlocked through this Transaction creates opportunities for new roles across the industry.”

“Our Mr Apple strategy is to focus on the sale of premium varieties to Asia and the Middle East markets, and drive improved margins from Mr Apple’s existing level of assets employed rather than expanding its asset base. The transactions announced will achieve those objectives. DazzleTM has been a highly successful variety for Mr Apple, and this transaction materially accelerates our strategy of increasing DazzleTM volumes. By inheriting mostly mature blocks we will have higher volumes of DazzleTM apples from 2025”.

Bostock Group Limited’s Managing Director, John Bostock, says “I am especially pleased that Scales is acquiring these orchards. The distinction between ‘organic’ and ‘conventional’ fruit is of a lower significance in Asia, where DazzleTM has strong market appeal. It is a natural fit for these orchards to be operated by Mr Apple and for the Bostock group to continue to service its customers in other markets with Bostock’s other varieties. There is a strong cultural alignment between our two businesses, and I feel confident that any staff moving between the growers will find themselves well at home at Mr Apple.”

Scales Corporation Chair, Mike Petersen, says “migrating our orchard mix to favour higher percentages of premium varieties, especially those varieties for which we have proprietary rights, is a core strategic imperative for Mr Apple as well as New Zealand’s broader horticultural industry. PVR varieties, such as DazzleTM, are more sought after than our traditional varieties, reflecting the superior colour qualities and eating experience. This allows the industry to continue to invest, innovate and expand whilst also creating high-value employment opportunities. Profruit is an extremely well-run business and we are very pleased to move to outright ownership.”

The Transaction is subject to customary closing conditions and expected to complete in early to mid-June 2024, while the Mr Apple orchard sales are not expected to conclude until the second half of the year. The Transaction and orchard sales are expected to have a negligible impact on Scales’ Net Profit After Tax Attributable to Shareholders for 2024 (the first full year of production from the affected orchards will not be until 2025). Further details on earnings are expected to be provided at or about the time of Scales’ half-year results announcement (late August), following confirmation of the outcome of the proposed orchard sales.

I’m pretty sure the Bostoks stuff has been on the market (unofficially) for a while… what worries me is that these orchards were/are run organically. Yield on these orchards will be dramatically lower than a conventional orchard. However it maybe the route to market that scales we’re looking for? Different channel at a higher margin?. These guys are pretty good and picking winners, so I’m sure they have done their homework.

[Sideshow Bob]

I’m pretty sure the Bostoks stuff has been on the market (unofficially) for a while… what worries me is that these orchards were/are run organically. Yield on these orchards will be dramatically lower than a conventional orchard. However it maybe the route to market that scales we’re looking for? Different channel at a higher margin?. These guys are pretty good and picking winners, so I’m sure they have done their homework.

Not really au-fait with the orchard business, but pretty sure they picked out the best orchards out of Bostock at a good price and moving on their underperformers.