Agri company Scales lifts first half profit, upgrades forecast for year

Logistics and apple exporter Scales has reported its first half result. Photo / Supplied

Shares in Scales Corp rallied sharply after the diversified agribusiness group reported a 5.4 per cent lift in its first-half underlying net profit to $33.3 million and upgraded its prospects for the full year.

By late morning, the stock was up 31c or 7 per cent at $4.78.

The company's net profit after tax for the six months fell to $22.36m from $30.32m, reflecting the marked-to-market value of its cash flow hedging facilities.

Scales reported an underlying EBITDA of $54.8m, up 11.0 per cent.

Chair Tim Goodacre said that Scales' divisions, despite challenges, had delivered an "exceptional" performance financially and operationally.

"We continue to benefit from our diversified agribusiness approach and from the strategic benefit that Scales Logistics brings to the Group," he said.

The horticulture division delivered an Underlying EBITDA of $38.0m, up 2.9 per cent on the previous corresponding period.

Mr Apple total's grown export volumes were forecast to be 3.6m tray carton equivalents (TCEs), down from 3.9m, due to labour shortages and supply chain constraints.

Volumes were affected by bad weather in the key growing season, but higher pricing offset these lower volumes as well as the increased labour and shipping costs that were incurred.

Managing director Andy Borland said horticulture had been affected by a shortage of RSE workers together with ongoing disruptions in global markets and supply chains.

However, higher pricing had offset these lower volumes as well as the increased labour and shipping costs that were incurred.

Borland said Scales had started a 10-year strategy to improve efficiency and returns through automation to help mitigate against the impact of labour shortages in the future.

The food ingredients division delivered underlying EBITDA of $16.1m from $11.0m, with the pet food division reporting a 30 per cent increase in volumes sold.

Logistics delivered an underlying EBITDA of $2.7m, down from $3.6m, reflecting supply chain constraints and a shortage of refrigerated containers.

Scales has upgraded its full-year guidance to an underlying net profit of between $32.0m and $37.0m, implying an underlying EBITDA of between $65.0m and $72.0m.

"We continue to anticipate disruptions to domestic and international operations including labour availability, global markets and supply chains due to the ripple effects of Covid-19," Goodacre said.

"However, we believe our diversified focus will go some way to mitigate these issues," he said.