Weighing up impact of Gabrielle
Scales Corp says it is still appraising the impact of Cyclone Gabrielle on the horticultural side of its business.
For six months ending June 30, the company made a net profit of $33.3 million, up 15% on the previous year.
Despite challenges, Scale’s horticulture division delivered underlying gross earnings of $38m, $1m better than 2020.
Scales owns the Mr Apple business, New Zealand’s largest grower, packer and marketer of apples. It grows apples on more than 1,100 hectares of orchards in the Hawke’s Bay.
Mr Apple’s total halfyear export volumes are forecast to be 3.6 million tray carton equivalents (TCEs), a drop of 300,000 TCEs.
Scales managing director Andy Borland says the horticulture division delivered a very strong performance – despite being impacted by a shortage of skilled RSE workers together with ongoing disruptions in global markets and supply chains.
He says volumes were affected by inclement weather in the key growing season. However, higher pricing offset these lower volumes – as well as the increased labour and shipping costs that were incurred.
“We are cognisant of the need to focus on increasing labour cost and availability issues and, accordingly, are pleased to note that we have commenced a 10-year strategy to improve efficiency and returns through automation. The first step of this journey was the development of our new Whakatu coolstore, which has already delivered a number of efficiencies this year.”
Scales’ other business divisions include food ingredients and logistics.
Borland says the strategic value of Scales Logistics is significant.
“During a period of global supply chain issues, together with a domestic shortage of refrigerated containers, Scales Logistics ensured all its horticulture customers were able to ship their 2021 harvests. This expertise provides a significant strategic advantage to the group.”
Full-Year Guidance
The solid half-year results have helped Scales Corporation upgrade its full year net profit guidance to be between $32 million and $37 million.
Scales chair Tim Goodacre says the company still anticipates disruptions to domestic and international operations, including labour availability, global markets and supply chains due to the ripple effects of Covid-19.
“This can be evidenced by the current lockdown in New Zealand,” he says. “However, we believe our diversified focus will go some way to mitigate these issues.”
Goodacre adds that the company is aware that it cannot operate during lockdowns without its team, “and their health and safety will continue to be our foremost priority”.
