Scales hikes interim dividend on rising earnings outlook

Wednesday 5th December 2018

Scales Corp will pay a bigger interim dividend than a year ago and says it may exceed annual earnings guidance as all its units tracking ahead of 2017.

The board declared a fully imputed dividend of 9.5 cents per share, up from 9 cents a year earlier, and said earnings before interest, tax, depreciation and amortisation will be at the top end of will slightly exceed current guidance of between $58-to-$65 million. Scales had previously said it expected earnings to be at the top of that range.

Scales singled out a record apple export crop from its Mr Apple division and increased volumes in its food ingredients operations, although all divisions are trading ahead of the year-earlier period, it said.

"This is an excellent performance for the group, further building on the initiatives within each business unit," managing director Andy Borland said in a statement. "All businesses and divisions have traded very positively during 2018, and provide a high level of confidence as the group looks to execute our refreshed growth strategy."

Scales is still waiting for Overseas Investment Office approval for the sale of its Polarcold cold storage unit. It also sold bulk liquids storage division Liqueo in the year. The two sales combined are expected to provide $130 million of net cash.

The Christchurch-based company wants to use those funds to buy agri-businesses more closely aligned with the rest of its portfolio, and has indicated it's interested in businesses that are fully vertically integrated, export-focused and can benefit from the firm’s relationships in China.

Scales today said it's making inroads on a number of its growth plans and some might be finalised in the near-term.

The directors said they hope to provide 2019 earnings guidance and provide an update on the Polarcold sale and growth plans at the annual earnings report, in February.

The shares last traded at $4.40 and have declined 8 percent so far this year, lagging behind a 5.6 percent gain on the S&P/NZX 50 index.

(BusinessDesk)

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