New Zealand’s biggest apple exporter, Scales Corp, has boosted its profit 6% after benefiting from expanding its business.
Profit increased to $38.2 million, or 27 cents per share, in 2016, from $35.9 million, or 25.7 cents, in 2015, the Christchurch-based company says.
Revenue rose 24% to $373.9 million, BusinessDesk reports.
The previous year’s results were restated to reflect a change in accounting policy for its apple trees.
Scales last year acquired Hawke’s Bay apple grower, packer and marketer Longview and secured China Resources Ng Fung as a strategic 15% shareholder.
That’s improved its network and access to the Chinese market. Scales also lifted its shareholding in apple marketing business Fern Ridge produce to about 73%.
The company picked more than half a billion apples during the year, lifting the volume exported and the average price as it benefited from favourable international demand.
“Our horticulture and food ingredients divisions produced excellent results, whilst our storage and logistics division produced another consistent outcome,” chairman Jon Mayson says.
Shares rose 0.6% to $3.52, and have surged 56% over the past year.
The company lifted earnings before interest, tax, depreciation and amortisation 6.9% to $67.3 million. Mayson reaffirms earnings for the 2017 year of between $55 million and $62 million, saying apple picking had begun and early indications are positive with very good sweetness, colour and fruit size.
The company says it lifted volumes of premium apples by 14% with the NZ Queens variety favoured by Asian markets up 60%, while overall volumes of its apples increased 12%. It launched the large red sweet Dazzle apple variety in December, and has further developments pending.
The food ingredients business lifted pre-tax profit 19% to $8.5 million as revenue increased 20% to $58 million.
Its Meateor unit increased the amount of pet food ingredients sold by 14% to 22,971 tonnes. Its Profruit unit sold 5.7 million litres of juice concentrate, down from 6.1 million litres the previous year because less fruit was rejected during the grading process.
Meanwhile, pre-tax profit at the company’s storage and logistics unit slipped 4% to $10.9 million.
Managing director Andy Borland says the company plans to review its activities to see if there are opportunities it should be pursuing to enhance cold store asset returns.
The company’s net debt increased to $34.6 million from $16.2 million the previous year.
“This low level of gearing places us in a strong financial position with capacity to finance future growth opportunities,” Borland says.
Scales expects to declare a final dividend for the 2016 year in May, with payment in July.
