New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Scales (SCL) FY21 Result First Take</h2>
Scales (SCL) reported a strong FY21 result with NPAT (including minority interests) of NZ$36.9m vs guidance of NZ$32m-NZ37m, ahead of both Forbarr forecast of NZ$34.8m and consensus of NZ$33.1m
Guidance for FY22 remains unchanged from the release in December 2021 which provided a range of NZ$30.5m to NZ$35.5m for FY22 NPAT (including minority interests)
Key areas of interest
<ul>
<li>All divisions reported a solid performance, with Food Ingredients particularly strong driven by the sustained global demand for petfood with divisional EBITDA of NZ$35.1m comfortably exceed SCL long term target of NZ$25m (Forbarr forecast NZ$27.7m)</li>
<li>Whilst Horticulture volumes were affected by weather and orchard development, this was offset by strong market pricing</li>
<li>SCL has also benefited from its own in house logistics division, allowing to better navigate the industry wide supply chain challenges</li>
<li>At a group revenue line SCL reported a record performance of NZ$514.6m vs Forbarr forecast of NZ$479.1m</li>
<li>Cash on balance sheet remains attractive for further potential M&amp;A with net cash of NZ$82.1m reported at December 2021</li>
<li>Dividend of 19.0cps was in line with policy (no less than 19cps whilst the company holds net cash, although no greater than actual underlying NPAT attributable to shareholders each year)</li>
</ul>
Our view
We see this very positive result as confirmation that SCL is better placed than most peers to navigate the on-going industry wide supply chain challenges given its own logistics division. The performance of the Food Ingredients division was particularly encouraging and we expect to see further acquisitive growth in this segment given the comments stated in the release, cash on balance sheet and performance of the existing division. Key items to look for in the call include 1) impact from wage inflation, 2) progress made on automation plans to increase productivity and 3) any signs that supply chain challenges are improving or worsening.
Results table
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Analyst call 10am NZT
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Scales (SCL) FY21 Result First Take
Scales (SCL) reported a strong FY21 result with NPAT (including minority interests) of NZ$36.9m vs guidance of NZ$32m-NZ37m, ahead of both Forbarr forecast of NZ$34.8m and consensus of NZ$33.1m
Guidance for FY22 remains unchanged from the release in December 2021 which provided a range of NZ$30.5m to NZ$35.5m for FY22 NPAT (including minority interests)
Key areas of interest

All divisions reported a solid performance, with Food Ingredients particularly strong driven by the sustained global demand for petfood with divisional EBITDA of NZ$35.1m comfortably exceed SCL long term target of NZ$25m (Forbarr forecast NZ$27.7m)
Whilst Horticulture volumes were affected by weather and orchard development, this was offset by strong market pricing
SCL has also benefited from its own in house logistics division, allowing to better navigate the industry wide supply chain challenges
At a group revenue line SCL reported a record performance of NZ$514.6m vs Forbarr forecast of NZ$479.1m
Cash on balance sheet remains attractive for further potential M&amp;A with net cash of NZ$82.1m reported at December 2021
Dividend of 19.0cps was in line with policy (no less than 19cps whilst the company holds net cash, although no greater than actual underlying NPAT attributable to shareholders each year)

Our view
We see this very positive result as confirmation that SCL is better placed than most peers to navigate the on-going industry wide supply chain challenges given its own logistics division. The performance of the Food Ingredients division was particularly encouraging and we expect to see further acquisitive growth in this segment given the comments stated in the release, cash on balance sheet and performance of the existing division. Key items to look for in the call include 1) impact from wage inflation, 2) progress made on automation plans to increase productivity and 3) any signs that supply chain challenges are improving or worsening.
Results table


Analyst call 10am NZT
Diamond Pass Invitation (c-conf.com)

Scales (SCL): FY21 First Take (Strong Result)

Scales Corp Ltd

Scales (SCL): FY21 First Take (Strong Result)