I got a surprise today to see this press release, issued in parallel with the virtual AGM.
https://www.nzx.com/announcements/383599
The automated beef boning room project is back on, with avengeance! There are a couple of odd features of the announcement though.
"This announcement sees Scott Technology partner with Teys, one of Australia’s leading protein producers, and Meat & Livestock Australia (MLA), to
develop a revolutionary beef solution"
So the solution has not yet been developed, after,-what?- over 15 years of trying? Isn't this the kind of project that CEO JK was trying to snuff out? The kind of project with indeterminate costs on a fixed budget ($18m). Actually $18m does not sound that much. I believe a fully functioning automated lamb processing line is around $12m-$14m, with all the design work pre-done. The machinery to handle a beef carcass is consummately bigger. So I can't see much 'development' money in that $18m develop, build install and commission project budget.
There is another thing odd about this announcement. JBS tout themselves as Australia's largest meat and food processing company. JBS are Scott's largest shareholder. Yet Scott's have selected meat processor Teys as their development partner, a direct competitor to JBS! Beef is the biggest meat processing industry in Australia by far. So JBS would have a huge amount to gain from the success of this automated beef room project. Yet they have chosen to 'sit back' and let their competitor steal the automation advantage. Huh?
Notwithstanding my confusion on which customer stands up first, this will be massive for Scott's as Australia (representing 4% of the global beef market) is only the beginning. This beef boning room will be the bridge to the USA, a market five times the size of Australia.
SNOOPY