Scales Corp posts $13.6m profit for 2012, cuts debt by 50%

Scales Corp, the fruit and vegetable logistics group controlled by investment firm Direct Capital, reported a return to profit in calendar 2012 and affirmed its intention to start paying dividends after reducing debt by about 50 percent.

Profit was $13.6 million in calendar 2012, from a loss of $8.99 million in the previous six-month period, according to the Christchurch-based company's annual report. Sales were $227 million, from $93.97 million in the six months ended December 31, 2011, a year in which it changed its balance date.

Net profit includes about $3.4 million of insurance proceeds from earthquake damage to its Scales House property in Christchurch and a non-cash writedown of $2.6 million on the value of its apple orchards.

Direct Capital acquired South Canterbury Finance's 79 percent stake in Scales for $44 million in 2011 with the New Zealand Superannuation Fund and Accident Compensation Corp as co-investors. Its holding now sits at 82.8 percent including shares held by funds under its management.

Direct Capital's Anthony Batterton and Mark Hutton are two of the four members of the Scales board.

The company did not publish a breakdown of earnings for its various agribusiness units. Mr Apple New Zealand, its apple grower and exporter, reported carton volumes that exceeded its forecasts by 3 percent in the latest year. Export cartons from its own and external orchards amounted to 3.65 million.

Prospects for the 2013 harvest "look promising" with export apple prices higher than in the previous year, which is "absolutely essential to offset the persistently high New Zealand dollar," the company says.

Scales owns 10.3 percent of Turners & Growers, having acquired the holding in 2011 in a move that blocked Germany's BayWa Aktiengellschaft from making a full takeover.

At the time Scales said it was hopeful the move could facilitate a merger between Mr Apple and T&G's Enza unit. It has subsequently bought 50 percent of Hawke's Bay apple exporter Fern Ridge Produce.

The investment in T&G "remains an opportunity for the group given our continuing view that consolidation and cooperation in the New Zealand export apple industry is important", Scales said in its annual report.

Its Whakatu Coldstores result exceeded budget, while Polarcold Stores enjoyed "solid trading in all catchments". Its Liqueo Bulk Storage unit improved on the previous year's performance, while pet food processor Meateor Foods had steady international sales in the face of a strong kiwi dollar that squeezed margins.

Freight consolidator Scales Logistics recorded a 10 percent lift in movements of perishable containers. Selacs Insurance, its captive insurance company, met a $1 million claim from Polarcold for damage to its Christchurch coldstore operations.

Term debt reduced to $64.95 million as at December 31, from $97.6 million 18 months earlier.

(BusinessDesk)

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I said it then and I maintain it now that the PE boys were able to pick this up from the receiver for far too cheaply. It's pleasing to see it thrive, but the taxpayer could have gotten more!

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