Scales Corp. Ltd. · NZX:SCL
Scales — H1 2023 Earnings Presentation
29 slides from Scales's earnings presentation, Aug 23, 2023
Slide 1: Scales Corporation Limited Half Year Results
SCALES CORPORATION LIMITED Bringing Nutrition to the World Half Year Results For the 6 Months Ended 30 June 2023 23 August 2023
Slide 2: Agenda
1. 1H23 Overview 2. Cyclone Recovery and Sustainability 3. Group Results 4. Divisional Performance 5. Global Proteins 6. FY23 Outlook Appendices: I. NZ IFRS Reconciliation II. Disclaimer Cover photo: Newly commissioned Meateor Australia factory, Melbourne Scales Corporation Limited – 2023 Half Year
Slide 3: 1. 1H23 Overview
1. 1H23 Overview
Slide 4: Resilient performance by the Group
✓ Resilient performance by the Group: ✓ Excellent Global Proteins performance together with solid Logistics earnings ✓ Commendable Horticulture operational result in light of the effects of Cyclone Gabrielle ✓ Financial results for 1H23 are in line with expectations: ✓ Underlying* NPAT Attributable
Slide 5: 2. Cyclone Recovery and Sustainability
2. Cyclone Recovery and Sustainability
Slide 6: Cyclone Gabrielle impact and Scales' response
As previously noted, many people experienced significant loss or disruption as a result of this event. The Hawke’s Bay community, people and culture are an integral part of Scales Extensively damaged and, as a result, Scales’ response included: Moderately damaged • Commitment of $250,000 in donation
Slide 7: Primary focus on our People and Community
Primary focus on our People and Community • Initiatives have included: • Offering wellbeing workshops to all staff, facilitated by a third party providing specialist trauma advice and tools • Providing financial contributions towards replacing lost belongings and offering the services of an insuranc
Slide 8: Extensive orchard remediation undertaken by our teams
Extensive orchard remediation undertaken by our teams • An enormous effort by all teams at Mr Apple, managing both the recovery and the daily operations of the season: • The recovery effort has been bigger than initially envisaged • Net earnings impact (taking into consideration government support a
Slide 9: 3. Group Results
3. Group Results
Slide 10: Diversified strategy delivers resilient result notwithstanding Cyclone Gabrielle
Diversified strategy delivers resilient result notwithstanding the effects of Cyclone Gabrielle • Reported NPAT Attributable to Shareholders of $3.9m (down 85.1% on 1H22) • Underlying NPAT Attributable to Shareholders of $14.5m (down 43.5% on 1H22) • Underlying NPAT of $24.8m (down 28.3% on 1H22) •
Slide 11: Global Proteins provides strong base for overall Group result
Global Proteins provides strong base for overall Group result • Global Proteins – consolidation of operational improvements in 2022 generate strong first half earnings • Horticulture – commendable result given the effects of the Cyclone on the growing and harvesting period • Logistics – solid result
Slide 12: Strong financial position
Strong financial position • Net Debt of $29.8m as at 30 June 2023 vs Net Cash of $16.8m as at 30 June 2022: ◦ Net Cash as at 31 December 2023 is forecast to be ~$10m • Agricultural produce represents unsold fruit at 30 June: ◦ As at 30 June 2023, 46% of crop sold (30 June 2022: 36%) • Movement in ot
Slide 13: 4. Divisional Performance
4. Divisional Performance
Slide 14: Global Proteins: excellent result capitalising on operational improvements
Excellent result, capitalising on operational improvements made in prior periods • Underlying EBITDA of $30.1m (1H22: $29.9m), an increase of 0.5%. Results include our 50% share of Fayman NPAT • Transition in earnings and volumes of Australian operations underway with commissioning of the Melbourne
Slide 15: Horticulture: commendable operating result in a difficult season
Commendable operating result given extremely difficult growing and post-harvest period Horticulture - Underlying EBITDA2 ($m) • Underlying EBITDA $11.4m (1H22: $24.5m): ◦ Earnings principally impacted by lower volume. Mr Apple’s forecast total own-grown export volumes are down 18% on prior year at 2
Slide 16: Encouraging growth in Dazzle and Posy
Encouraging growth in DazzleTM and PosyTM Premium Volumes (TCE 000s) • Premium volumes increasingly comprised of Mr Apple PVRs; DazzleTM and PosyTM (15.4% for 2023F) • Asia & Middle East sales expected to comprise 75% of total fruit sold: ◦ High demand for DazzleTM in Asia & Middle East, with demand
Slide 17: Logistics: supply chain reliability improving
Supply chain reliability improving • Underlying 1H23 EBITDA of $2.7m (1H22: $3.6m), a decrease of 25.7%, consistent with Cyclone-impacted produce volumes • Strengthening demand for airfreight volumes due to new customers and changes in product mix • Prices easing and delivery times improving, with f
Slide 18: 5. Global Proteins
5. Global Proteins
Slide 19: European petfood joint venture with Esro
Structure • 50/50 joint venture between Scales and Esro Food Group (Esro) Investment • Scales is providing lending facilities for a combined €15m • Interest rates and repayment schedules are on commercial terms Funding • Initially funded through cash reserves Sites • The first site will be in Hoesel
Slide 20: Hoeselt site location and European petfood market
• The initial site in Hoeselt is: US$25b retail value • Ideally located to the largest retail markets (shown in dark green) • Strategically located close to key customers’ facilities • The largest petfood manufacturers in Europe are already our key customers 2nd largest in the US, providing an oppor
Slide 21: Scales Corporation Limited – 2023 Half Year Results
Scales Corporation Limited – 2023 Half Year Results 21 global nutrition
Slide 22: Global Proteins' Strategy
• Entering a new market extending supply diversification Global supply and logistics • Leveraging Esro’s networks to create a competitive advantage, through immediate 01 excellence and secure access to raw material and an established logistics capability • Focus will initially be on beef and salmon
Slide 23: Global Proteins regional growth initiatives
Global Primary Secondary processing Customer partnerships supply processing Developing in-plant Commissioned new plant (Australia) 3Q23 Pursuing opportunities for further Australia & NZ collection system for key processing to allow our customers to New blending capability (NZ) 2024 suppliers in Aust
Slide 24: 6. FY23 Outlook
6. FY23 Outlook
Slide 25: Scales re-confirms its FY23 guidance
Scales re-confirms its FY23 guidance • Directors re-confirm that Underlying Net Profit Attributable to Shareholders is expected to be within the previously advised range of $14.0m to $19.0m • In re-confirming this guidance Directors note: ◦ Broader economic trends are likely to affect international
Slide 26: Appendices
Appendices
Slide 27: Scales Corporation Limited – 2023 Half Year Results
Scales Corporation Limited – 2023 Half Year Results 27 global nutrition
Slide 28: Scales Corporation Limited – 2023 Half Year Results
Scales Corporation Limited – 2023 Half Year Results 28 global nutrition
Slide 29: Disclaimer
The information in this presentation has been prepared by Scales Corporation Limited with due care and attention. However, neither Scales Corporation Limited nor any of its directors, employees, shareholders nor any other person shall have any liability whatsoever to any person for any loss (includi