Apple exporter Scales has reported a slight gain in operating earnings for 2020. Photo / Hawke's Bay Today
Apple exporter Scales has reported a slight gain in operating earnings for 2020. Photo / Hawke's Bay Today
Scales Corp eked out a slight gain in its operating earnings over the 2020 year but the agribusiness group said bad weather and shipping delays would weigh on the current year's performance.
The company's underlying ebidta for calendar 2020 came to $53.9 million, up from $52.7m in 2019, whileits underlying net profit fell to $33.8m from $36.4m.
Scales bottom-line profit came to $26.6m, down from $121.6m in 2019, the prior period's number having been inflated by asset sales.
Chairman Tim Goodacre said staff had displayed unity during a "challenging and disruptive year".
"This unity enabled Scales to continue trading throughout lockdowns, without New Zealand government wage subsidies, and still deliver a profit result consistent with our originally provided guidance," he said.
"The diversified strategy of the group provided us with a solid base from which to operate," he said.
Looking ahead, Goodacre said 2021 had not started well.
"Inclement national weather events have taken place over the key growing period and global supply chains continue to be disrupted, with ongoing delays in shipping and increased costs," he said.
Scales now expects its underlying net profit to be between $27.5m and $33.5m, implying an underlying ebitda range of between $46.5m and $53.5m.
"This reflects significantly lower levels of stone fruit exports from the Otago region impacting on Scales Logistics," Goodacre said.
The Tasman region was expecting a significantly lower level of pip fruit exports, which would impact on third party export volumes for Mr Apple and Fern Ridge, he said.
Mr Apple expects its own-grown volumes will be lower than forecast, he said.
Ongoing delays in shipping resulted n higher port side charges impacting on all group business units, Goodacre said.
Shipping delays could impact on Scales' earnings voer 2021. Photo / NZ Herald
In its 2020 result, Scales said the divisional mix of earnings differed compared to prior years, with an exceptional performance recorded by the food ingredients division.
Apple exporter Mr Apple benefited from geographical and varietal diversification.
Volumes and prices in Asia and the Middle East were affected by the timing of lockdowns on consumers, but it benefited from firm European and UK markets.
Food Ingredients produced a stand-out result, benefiting from a strong growth in global petfood demand together with geographical diversity in its supply network and sources of proteins.
Managing director Andy Borland said Mr Apple completed phase 2 of its orchard redevelopment programme, finalised the upgrade of its seasonal worker accommodation and recently completed the build of its new purpose-built coolstore at Whakatu.
Scales continued to be in a strong financial position, with net cash at December 31 of $97.6m.
"This provides us with a solid base from which to invest in future growth opportunities, both organic and acquisitive," he said.
During the year Scales declared dividends of 19.0 cents per share.
As in previous years, the board expected to declare a final dividend in respect of 2020 in May, with payment in July.
Earnings by division
Horticulture: Underlying ebitda $31.4m from $39.7m, down 20 per cent. Food Ingredients: Underlying ebitda $23.1m from $13.5m, up 71 per cent. Logistics: Underlying ebitda of $3.4m from $3.3m, up 4 per cent.
