Directors buying
https://www.nzx.com/announcements/407618
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Directors buying
https://www.nzx.com/announcements/407618
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.
hitting new low's
the apple situation must be worse than feared :scared:
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?
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!
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-websit...177/389221.pdf
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.....;)
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.
Director Nick Harris bought 50k shares at price 2.86 on March 23rd.
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?
$45m (300 hect * 150k) !
Anyway bought some more today.
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.
After all the chaos expected profit of 18m in F23 pretty good ….only down 33% on F22 of 27m
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. :(
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.
Mr Scales .. you done it again :)
Not a lot to not like about this company :)
Volume is pretty low this morning. With $10k you could drive the stock to $42 per. 15 bagger mate. Anyone keen?
Attachment 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 ...;
I didnt know they arent all visible... interesting. Makes sense
Decided to pay a final divvy - 9.5c fully imputed.
https://www.nzx.com/announcements/410690
Statement of confidence from the company. Cyclone not the issue we thought it was?
bit dis-appointing they paying a div instead they should be re-investing monies to rebuild and grow the business
Interesting writeup in the N Z Herald today, not all doom and gloom, see what punters think !
Go ex-dividend on Wednesday next week.
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.”
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.
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.
[
Nice one Percy. Clearly signaled.
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...??
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
Still a promising company. Growth in proteins, horticulture should have a good year in 24. This is my biggest holding.
Looking like it will go sub $3's. In recent times it was only through Cyclone Gabrielle that it got below $3....
"Hawke's Bay orchardists waiting to see if their trees will burst into life, or die after cyclone"
https://www.stuff.co.nz/business/far...September+2023
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".
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-c...esentation.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.
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.
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
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.
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
A little bit of good news to start the day - or to end the year?
https://www.nzx.com/announcements/423143
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....
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.”
https://www.nzx.com/announcements/428634
Interesting to browse through.
Yep, quite an upbeat report
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.
Scales already owned 50% of Profruit,therefore they will now own 100%.
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!
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...
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??
Global Proteins preso.
https://api.nzx.com/public/announcem...438-420352.pdf
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.
Harbour have been buying a few more for a BNZ fund they manage.
https://api.nzx.com/public/announcem...693-420637.pdf
$3.60 now is pretty decent. I think $4:50 is the target, so still got 25% to go.... will take a few good reports for this to happen.
https://www.nzx.com/announcements/432780
Bostock now all settled.
Think you are right there, one to hold.