Scales Corp. Ltd. · NZX:SCL
Scales — H1 2022 Earnings Presentation
29 slides from Scales's earnings presentation, Aug 24, 2022
Slide 1: Scales Corporation Half Year Results 2022
SCALES CORPORATION LIMITED Bringing Nutrition to the World Half Year Results For the Six Months Ended 30 June 2022 24 August 2022 Scales Corporation Limited – 2022 Half Year Results 1 global nutrition
Slide 2: Agenda
1. 1H22 Overview 2. Global Proteins 3. Sustainability 4. Group Results 5. Divisional Performance 6. FY22 Outlook Appendices: I. NZ IFRS Reconciliation II. Disclaimer Scales Corporation Limited – 2022 Half Year Results 2 global nutrition
Slide 3: 1. 1H22 Overview
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Slide 4: Sustained growth in Food Ingredients, renamed Global Proteins
Sustained growth in our Food Ingredients division has reaffirmed our belief in its global potential, particularly with regards to proteins. The success of our strategy, combined with the opportunities that are presenting themselves, has led to a renaming of the division to Global Proteins. Our strat
Slide 5: 2. Global Proteins
2. Global Proteins
Slide 6: We are actively progressing our strategy objectives
We are actively progressing our strategy objectives Petfood Ingredients Sold (MT 000s) • We firmly believe in the potential of the food ingredients opportunity. Given both the recent results of the division, and its global potential, we have changed the name of the division to better reflect its foc
Slide 7: Global meat consumption and pet food consumption value
• There is a correlation in the growth in petfood and human consumption protein demand Global Human Meat Consumption (MT) vs due to their related drivers: Global Petfood Consumption ($) ◦ Estimated global population of 8.6 billion by 2030, with most of the growth from developing / 700 $200 emerging
Slide 8: Strong relationship between petfood and edible protein supply chains
There is a strong relationship between petfood and edible protein supply chains • Scales’ strength in global proteins lies in its supplier and customer relationships coupled with its logistics network, and a reputation for quality products. Scales will look to leverage this expertise for complementa
Slide 9: Our value proposition is our wide range of quality ingredients
Our value proposition is our wide range of quality ingredients and end-to-end supply chain excellence • ‘One stop shop’ for customers and suppliers We source and • Global supply relationships supply premium Current and growing protein ingredients mismatch between protein supply and demand in • Speci
Slide 10: Critical factors in becoming a global strategic partner
The critical factors in becoming a global strategic partner to our customers and suppliers are: Sourcing globally improves Simplify the procurement supply continuity for our process for our customers customers, and accessing as many are wanting to new markets accelerates our consolidate supplier vol
Slide 11: Secure global supply, expand species, access new markets
Objective • We will enter into partnerships, joint ventures and alliances to further develop our supply network, either working alongside existing operations Secure global supply and that are complementary to our own or with protein suppliers to achieve access to additional protein sources access ne
Slide 12: 3. Sustainability
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Slide 13: Continuous improvement
Continuous improvement 2022 is about re-focusing on the key material issues • We are currently undertaking scenario analysis to better understand our future physical and transitional risks and opportunities • The aim is to then re-visit our material issues, and use this information to get clarity on
Slide 14: 4. Group Results
4. Group Results
Slide 15: Diversification strategy delivering resilient and solid results
Diversification strategy and strong teamwork delivering resilient and solid results • Reported NPAT Attributable to Shareholders of $26.1m (down 8.0% on 1H21) • Underlying NPAT Attributable to Shareholders of $25.6m (down 11.7% on 1H21) • Underlying NPAT of $34.7m (up 4.0% on 1H21) • Underlying EBIT
Slide 16: Solid results underpinned by sustained growth in Global Proteins
Solid results underpinned by sustained growth in Global Proteins • Global Proteins – an exceptionally strong 1H22, attributed to increased volumes sold together with changes in product mix and margins • Horticulture – strong in-market prices to date more than offset by reduced volumes and increased
Slide 17: Strong financial position
Balance Sheet Strong financial position $m Jun-22 Jun-21 Current assets excluding cash Trade & other receivables 101.6 77.0 • Net Cash of $16.8m at 30 June 2022 vs $38.0m at 30 June 2021 Inventories 38.7 32.7 Agricultural produce 85.4 74.4 • Agricultural produce represents unsold fruit at 30 June: O
Slide 18: 5. Divisional Performance
5. Divisional Performance
Slide 19: Significant growth, reflecting ongoing global demand for petfood
Significant growth, reflecting ongoing global demand for petfood • Excellent half year result: ◦ Underlying EBITDA of $30.4m (1H21: $16.1m), an increase of 88.6% ◦ 13% increase in volumes sold ◦ We expect that earnings for the 2H22 will be similar to 2H21 ◦ The development of new organic growth oppo
Slide 20: Significant headwinds encountered
Significant headwinds encountered • Underlying EBITDA $24.0m (1H21: $38.0m): ◦ Higher in-market pricing was offset by lower export volumes and increased labour and shipping costs • Mr Apple own-grown volumes lower than both forecast and 2021 volumes • Packhouse automation project progressing well Ho
Slide 21: Volumes affected by weather and operational effects
Volumes affected by weather and operational effects Mr Apple Own Export Volumes (TCE 000s) • The National crop volumes for 2022 are forecast to be around 6% less than 2021 ◦ Hawke’s Bay and other growing regions, impacted by adverse weather events during key growing period ◦ Industry affected by RSE
Slide 22: Market diversification partially offset effects of difficult season
Market diversification partially offset effects of difficult season • Inflation and the overall cost of living has curbed consumer spending globally ◦ Expected positive demand for the upcoming China Mid-Autumn Festival, although lockdowns impacted earlier sales volumes ◦ Steady demand in other Asian
Slide 23: Strategic value continuing to prove important
Strategic value continuing to prove important • Underlying EBITDA of $3.6m (1H21: $2.7m), an increase of 31.9% • Ongoing pressure on the global supply chain: ◦ Restricted shipping capacity, labour shortages and increased costs • Skill and expertise of team providing vital services and sourcing solut
Slide 24: 6. Outlook
6. Outlook
Slide 25: Scales has updated its FY22 guidance
Scales has updated its FY22 guidance • Directors advise that Underlying Net Profit Attributable to Shareholders is now expected to be at the upper-end of the previously advised range of $23.5m to $28.5m ◦ Due to the change in earnings mix, the implied Underlying Net Profit range has increased to $35
Slide 26: Appendices
—_ * Appendices ~ © *
Slide 27: Reconciliation of Divisional Underlying Profitability to Reported Profitability
Reconciliation of Divisional Underlying Profitability to Reported Profitability Group Global Proteins Horticulture Logistics Corporate & Eliminations $m 1H22 1H21 1H22 1H21 1H22 1H21 1H22 1H21 1H22 1H21 Underlying / Reported Revenue 309.3 253.8 151.7 99.8 117.3 127.4 67.9 43.6 (27.6) (17.0) EBITDA R
Slide 28: Reconciliation of Divisional Underlying Profitability: NPAT
Reconciliation of Divisional Underlying Profitability to Reported Profitability Group Global Proteins Horticulture Logistics Corporate & Eliminations $m 1H22 1H21 1H22 1H21 1H22 1H21 1H22 1H21 1H22 1H21 NPAT Reconciliation Underlying NPAT (excluding NZ IFRS 16) 34.8 33.6 24.3 13.3 10.1 20.3 2.2 1.6
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