World labour shortages boost Scott Technology’s first-half profit

Automated systems provider Scott Technology has benefited from world labour shortages. Photo / Supplied

Labour shortages helped boost automated systems provider Scott Technology’s profit by 66 per cent to $8 million in the first half - a trend it expects to continue in the second.

Revenue rose by 11 per cent to $127m and margins grew from 22 per cent to 26 per cent, despite inflationary and supply chain pressures.

Ebitda increased 20 per cent to $15m.

Scott’s sales and services of its three core sectors delivered 77 per cent of group revenue and 92 per cent of its margin.

Scott is 52 per cent owned by JBS Australia - which itself is owned by Brazil’s JBS - the world’s biggest meat processor.

Chief executive John Kippenberger said there had been good growth in Scott’s business in Europe and in the US in particular, and in some of the meat processing systems in Australia and New Zealand.

“What this is showing is the strength and demand for automation is still very strong because a lot of the big companies are having the same labour supply problems,” he said.

“It’s where investment in automation comes in and Scott has a good brand in terms of delivering value into some big markets,” he said.

Kippenberger noted labour supply was very tight for some of the regional meat processors in Australia and New Zealand, and among the major food processors in the US and Europe.

“It’s an ongoing trend but there is a lot of strength in demand coming from companies that need automation to continue to grow.

“We don’t see that demand profile changing because we already have good forward orders of over $180 million across all our sectors,” Kippenberger said.

Operating cashflow of $26m was higher due to the strong underlying performance of the business but also the timing of significant cash deposits relating to large projects won, which in turn boosted the group’s net cash position to $12.8m.

Scott declared a 4 cents per share dividend, unchanged from the previous comparative period.

Kippenberger said Scott’s strategy of building its service and aftermarket business has been important for customers.

The service business underpinning the core business segments saw strong growth of 22 per cent in the period.

This represented 31 per cent of the total revenue of the core business, with margin growing to 40 per cent.

Scott’s shares last traded at $2.97, up 20c from its previous close.