Scales Corporation (NZX: SCL) buys stake in Meateor and Fayman

November 01, 2022 04:32 PM NZDT | By Manika
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  • Scales announced today (1 November 2022) that it had completed its investment in two companies.
  • Scales picked up a 33% interest in Meateor and 50% interest in the Australian operations of Fayman International.
  • According to Scales, these investments will enable it to expand its reach.

Scales Corporation Limited (NZX: SCL), which is a diversified agribusiness company, today confirmed that it had completed investments in two Australian companies as announced on 27 September 2022.

The investments are a 33% interest in a Melbourne-based pet food processing company and a 50% purchase of the Australian operations of Fayman International.

These investments are expected to cost the company approximately AU$27 million and are to be funded from the company’s existing cash reserves.

Tim Goodcare, the chairman of Scales Corporation, said that the company was very pleased to settle these investments and that they would help the business grow. With the investments, the company hopes to expand its products and reach, he said.

2HFY22 update

In its outlook for the second half of FY22 (2HFY22) provided today (1 November 2022), the company said that the earnings for the Global Proteins division were expected to be higher in 2H22. Trading in the horticulture division in 2H22 is likely to be down and below the forecast provided in August.

Further, it said that Mr Apple, which is a part of the Horticulture division, sold 79% of the 2022 export crop as compared to 90% sold in the previous comparable period (PCP).

The final update will be provided in December, the company said.

In its 1HFY22, the company had reported an underlying NPAT of NZ$25.6 million, down 11.7% versus the PCP. However, its reported NPAT was at NZ$35.1 million, 7.5% over the PCP. 

It was a very challenging year for its Horticulture division, as per the  company, but it benefitted from growth in other divisions, like Global Proteins and Logistics.

Full-year outlook

Scales also provided its full-year outlook in August.  The underlying net profit attributable to shareholders was expected to be in the range of NZ$23–NZ$28.5 million. The implied underlying net profit range had increased to between NZ$35 million and NZ$43 million and underlying EBITDA was expected to be between NZ$65 million and NZ$75 million.

In its update for separate divisions, the company said that its Global Proteins earnings were expected to be similar to those of the previous years. Earnings from the Horticulture division were subject to the Mid Autumn Festival sales in China. The challenges in global logistics are expected to continue through 2023.

However, within the company, the logistics division was able to deliver a strong underlying EBITDA of NZ$3.6 million, having increased from NZ$2.7 million in the same period last year.

Stock update

On 1 November 2022, the stock of the company was trading up 0.42% at NZ$ 4.760, at the time of writing.





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