2021 Annual Results announcement

Thu, Feb 24 2022 08:31 am

24 February 2022


Highlights – 12 months to 31 December 2021

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.”

“Our diversified agribusiness strategy has underpinned record revenue and record Underlying NPAT notwithstanding the effect of COVID-19 on both global and domestic markets. In particular, the Food Ingredients division has recorded another outstanding result, partly aided by the growing demand for petfood together with its geographical and protein diversity.”

“Mr Apple also benefited from diversification in terms of both markets and varieties. Whilst volumes were affected by weather and orchard redevelopment, it was aided by strong in-market pricing. Scales Logistics’ strategic value to its customers, including in house customers Mr Apple and Meateor, once again proved to be invaluable, with supply chain challenges successfully navigated.”

Andy Borland, Managing Director of Scales Corporation, noted: “It has been another demanding year for the Group, and the Board and senior leadership team are indebted to all staff for their unwavering commitment. We are especially proud of their ability to adapt to the changing operations and conditions throughout the year. Their health, safety and wellbeing is our priority, and we continue to introduce and develop initiatives to assist in this area.”

“In addition to a record financial year, we have progressed our strategic plans. Mr Apple has commenced its multi-year packhouse automation project, as well as continuing the redevelopment of its orchards. Food Ingredients has identified a number of growth opportunities and its divisional CEO, John Sainsbury, expects to relocate to the USA this year to progress a number of those.”

“Our sustainability team responded to new challenges and developed new initiatives, including an initial in-house carbon footprint assessment for Meateor NZ. Our new Whakatu coolstore has also exhibited environmental benefits, by reducing freight movements between it and our coolstores as well as reducing power consumption.”

“Our financial position is strong, with net cash at 31 December 2021 of $82.1 million. This gives us security to invest in both organic and acquisitive growth opportunities.”

During the year Scales declared dividends of 19.0 cents per share . As in previous years, the Board expects to declare a final dividend in respect of FY2021 in May, with payment in July.


Underlying FY2021 EBITDA for the Horticulture division was $39.1 million (FY2020: $40.8 million).

Mr Borland commented “The Horticulture division delivered a very strong result given the significant market uncertainty and logistics challenges. The Mr Apple harvest of 3,651k TCEs was picked, packed and exported in full and on time to global markets, with a pleasing 6 per cent increase in premium varieties compared to 2020. Weather and orchard redevelopment impacted the volumes of traditional varieties.”

“We experienced continued growth in the Asia and Middle East markets despite disruptions caused by COVID-19. In-market pricing was also strong, with pricing above the prior year for most varieties. This reflected reduced in-market volumes, larger fruit for certain varieties and strong demand for our new varieties such as DazzleTM. Mr Apple’s diversified strategy, both in terms of geographical markets and varieties, continues to prove successful.”

“Mr Apple implemented its multi-year investment and automation plan to increase productivity and sustain margins, with the installation of tray de-nesting machines at the Whakatu packhouse. We believe that this project, once complete, will result in the Whakatu packhouse becoming one of the world’s most automated apple packhouses. We also redeveloped 35 hectares of orchard, primarily into DazzleTM and NZ PrinceTM varieties, as well as continuing to implement our ‘intensive planting’ techniques to enable pruning, thinning and picking efficiencies”

Food Ingredients
The Food Ingredients division generated Underlying EBITDA of $35.1 million (FY2020: $23.1 million), an increase of 52 per cent.

Mr Borland noted “This was an outstanding performance by Food Ingredients, causing it to easily exceed its long-run EBITDA target of $25 million. Volumes of petfood ingredients sold increased by 29 per cent compared to FY2020, reflecting a sustained growth in the global and domestic petfood market. Increased volumes were processed by Shelby in part due to the commissioning of a new plate freezing facility in the Dodge City, Kansas, premises.”

“The division continues to take advantage of its diversified geographical and protein supplies, which reduced the impact of COVID-19 on global supply chains. We have confidence in the growth opportunities available to this division both domestically and overseas.”

The Logistics division delivered Underlying EBITDA of $4.9 million (FY2020: $4.2 million), an increase of 17 per cent.

Mr Borland said “the strategic value of Scales Logistics was once again apparent, with the business successfully navigating a challenging and complex international supply network on behalf of its customers. Financially, it generated a strong full year result despite being impacted by global logistics pressures and increased costs.”


Mr Goodacre commented: “Whilst Scales’ diversification has helped mitigate disruption to both domestic and international operations, there continues to be significant uncertainty about the year ahead. Global supply network pressures are expected to remain in place at least throughout 2022, with a significant increase in shipping and other logistics costs anticipated. There is also an ongoing shortage of labour within the agribusiness sector.”

“In our Food Ingredients division, exports from Australia have outperformed expectations however, we note that as of 31 December 2023, we will no longer have an exclusive ongoing relationship with our existing supplier.”

“Notwithstanding the market pressures, picking and packing of the 2022 season has commenced at Mr Apple and current indications are positive, with strong early demand for our branded varieties such as PosyTM and DazzleTM. Global petfood demand also shows little sign of slowing, and we believe our Food Ingredients businesses are well placed to capitalise on this growth. The relocation of John Sainsbury to the USA reinforces our confidence in the opportunities available to the division.”

“Accordingly, the Board reconfirms the Underlying Net Profit Attributable to Shareholders guidance for the group to be between $23.5 million and $28.5 million, implying an Underlying Net Profit range of $30.5 million to $35.5 million and an Underlying EBITDA range of $62.0 million to $67.0 million.’

Mr Goodacre also noted “Once again I would like to extend my thanks and appreciation on behalf of the Scales Directors and Shareholders to the entire Scales team. Without their commitment our strong results would not be possible.”

Andy Borland, Managing Director, Scales Corporation Limited, Mob: 021 975 999,
email: andy.borland@scalescorporation.co.nz

About Scales Corporation
Scales Corporation is a diversified agribusiness group. It comprises three operating divisions: Horticulture, Food Ingredients and Logistics. The company’s diverse spread of activities gives Scales broad exposure to New Zealand’s agribusiness sector. Scales Corporation was founded in 1897 as a shipping business by George Herbert Scales. Today it has operations across New Zealand, Australia and the United States. Find out more at www.scalescorporation.co.nz.

Announcement PDF

Markets News

Markets market close
NZ shares fall as market rally evaporates
Dan Brunskill | Wed, 29 Jun 2022

A survey showed US consumer confidence was at its lowest since 2013.

Kiwi chair Mark Ford says property values may fall 5-10%
Jenny Ruth | Wed, 29 Jun 2022

Many of the factors weighing on Kiwi Property's share price are beyond its control, chair Mark Ford told shareholders.

Cecilia Robinson shoulder tapped for My Food Bag board seat
Dan Brunskill | Wed, 29 Jun 2022

The serial entrepreneur kept a financial and personal stake in the company, even after its IPO last year. 

New Image fined $1.5m for 2013 Takeovers Code breaches
Staff reporters | Wed, 29 Jun 2022

New Image delisted from the New Zealand Stock Exchange in May 2013 after its major shareholder gained control. 

Air NZ gets set for post-pandemic competition with cabin refit
Dan Brunskill | Wed, 29 Jun 2022

The cabin redesign's focus on sustainability lowers operating costs for the airline and gives it a unique selling point.  

Govt signs off on treating Fonterra fund investors badly
Jenny Ruth | Wed, 29 Jun 2022

Agriculture minister Damien O’Connor has acknowledged the fund investors may feel “unfairly prejudiced” and failure to buy them out could hurt NZ’s investment climate.

Markets FREE
Sleepy day for NZ shares
Ella Somers | Tue, 28 Jun 2022

NZ shares were lethargic this morning before getting some of the pep back in their step by the end of the day.

Carbonz wants to be the Sharesies of carbon credits
Ian Llewellyn | Tue, 28 Jun 2022

A new carbon trading platform aims to bring retail investors and landowners into the carbon market while increasing biodiversity and cutting emissions.

Markets market close
NZ sharemarket rebounds with Wall Street rally
Dan Brunskill | Mon, 27 Jun 2022

US markets rallied on Friday night as traders began thinking an economic slowdown would stop the US Federal Reserve from hiking interest rates.

News in Brief FREE
Cannasouth announces new manufacturing deal
Staff reporters | Mon, 27 Jun 2022

The medicinal cannabis company has signed a three-year deal with Harker Herbal Products.

Fletcher wowed analysts at last week’s investor day
Jenny Ruth | Mon, 27 Jun 2022

All five of the analysts’ reports BusinessDesk has seen have either “overweight” or “outperform” investment recommendations on Fletcher shares.

Markets FREE
How to survive a bear market
Dan Brunskill | Fri, 24 Jun 2022

Bear markets can be stressful but they also present opportunities for investors, says Salt Funds' Greg Fleming.  

Markets FREE
Index heavyweights pull NZ shares higher
Ella Somers | Thu, 23 Jun 2022

Peter McIntyre, an investment adviser at Craigs Investment Partners, said it had been a “strong performance” in today’s market.

How we can fix New Zealand's ports – Don Braid
Brent Melville | Thu, 23 Jun 2022

The head of the multinational logistics group says having container cranes sitting idle across the country is a waste of assets

Markets Exclusive
Investment platform Stake brings stock lending to NZ
Dan Brunskill | Thu, 23 Jun 2022

The zero-brokerage fee share trading platform is looking for ways to bring in revenue and make its business model more sustainable. 

Fletcher to deliver at least $850m operating earnings in 2023
Jenny Ruth | Thu, 23 Jun 2022

Fletcher Building achieved second-half profit margins of 9.5%, just below its target of 10% by the 2023 financial year.

Markets market close
NZ shares fall as Eroad near all-time low
Dan Brunskill | Wed, 22 Jun 2022

Eroad had a second day as the index’s biggest decliner, falling more than 5% to $1.57 and bringing its decline over the past year to almost 75%.

Fletcher said Gib orders reached double capacity
Staff reporters | Wed, 22 Jun 2022

Fletcher's new plant at Tauriko, due to open next year, will increase industry capacity by 30%.

Craigs recommends investors be ‘overweight’ Fletcher shares
Jenny Ruth | Wed, 22 Jun 2022

Even under a “bear-case scenario”, the house building pipeline should support Fletcher’s medium-to-long-term performance.

Markets FREE
NZ shares rise as recession fears ease
Ella Somers | Tue, 21 Jun 2022

Some investors in NZ’s market took the opportunity to buy up “beaten up” stock on the index today, Devon Funds' Greg Smith said.

Markets market close
NZ shares flat as recession risk puts investors off trading
Dan Brunskill | Mon, 20 Jun 2022

Trading volumes were unusually light, with US markets closed tonight for a national holiday.

NZSA, Simplicity call for Fletcher chair Bruce Hassall to resign
Jenny Ruth | Mon, 20 Jun 2022

The shareholder representatives say the Fletcher board must bear ultimate responsibility for the company’s poor performance and the Gib plasterboard shortage.

NZME makes up for slow buyback with $10m special dividend
Dan Brunskill | Mon, 20 Jun 2022

NZME has only spent $5.3m of the $30m set aside for share buybacks. 

Macquarie says Australian banks are profiting from low term deposit rates
Dan Brunskill | Mon, 20 Jun 2022

Are banks being too slow to raise term deposit rates? Some analysts say yes.