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Scales satisified with 2017 results

Challenging growing season dents Mr Apple profits but storage and logistics division enjoys strong growth

Scales satisified with 2017 results

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New Zealand group Scales Corporation, which owns Mr Apple, has released its financial results for the year ending December 31, 2017.

The group reported a record revenue of NZ$399.1m (US$290m) – a 7 per cent increase from 2016, with net profit coming in at NZ$31.8m. Earnings before before interest, taxes, depreciation and amortization (EBIDTA) reached NZ$62m, at the top end of the previously provided guidance.

"This is a very satisying result in light of a challenging growing season and some competitive trading conditions," said Scales Corporation chairman Tim Goodcare.

The company's horticulture division - centered on Mr Apple – suffered a 14 per cent drop in profit YOY, coming in at NZ$38.9m (US$45m), down from NZ$45.3m (US$33m) in 2016.

Scales Corporation said the profit loss was attributable to an overall reduction in the weighted average sale price achieved following record 2016 prices, increases in on-orchard costs due to adverse weather, and the impact of slightly reduced Mr Apple volumes.

Mr Apple's export volumes remained similar to 2016, with like-for-like production falling less than 5 per cent in what the company described as "a very challenging growing season".

“Investments made during the season paid off with overall export volumes sold being maintained at 3.55m tray carton equivalents (18.6kg),” said managing director, Andy Borland.

Scales Corporation’s storage and logistics division saw an 18 per cent increase, with underlying EBITDA of NZ$19.1m (US$14m).

“We saw a strong EBITDA uplift of 24 per cent from cold-store activities, reflecting a return to more ordinary levels of trading,” Borland explained.

“Scales Logistics acquired OceanAir in August 2017 and this, together with organic growth opportunities, resulted in a 46 per cent increase in EBITDA compared to 2016. Both TEUs shipped and airfreight tonnes managed were up on the prior year.”

Rounding out the results, Scales' food ingredients division generated underlying EBITDA of NZ$8m, down from NZ$9.2m in 2016. "Within this division, Meateor sold close to 28,000 tonnes of pet food ingredients, an increase of 20 per cent on its record FY2016 volumes, although a competitive environment resulted in margin pressures," said Borland.

Goodacre reported a positive outlook for 2018. "Apple picking for the 2018 crop has recently begun, slightly ahead of normal harvest times. In spite of wet weather experienced by the region, early indications are positive," he said. "We anticipate the storage and logistics division will build upon its 2017 result and that volumes will continue to grow with the food ingredients division."


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