The parent company of Mr Apple has exceeded expectations in its first annual result announcement to the New Zealand Stock Exchange (NZX), supported by a very strong performance from its horticulture division.

Scales Corporation (NZX:SCL) has reported an EBITDA of NZ$39.8 million for 2014, which exceeded the initial public offering (IPO) forecast by 2.7%. In terms of net profit for continuing operations, the group outperformed IPO estimates by 15% at NZ$18.1 million.

In the context of other New Zealand produce companies, this compares to Turners & Growers' (NZX:TUR) result of NZ$24.9 million for the year, and Zespri's expected NZ$34-37 million net profit for 2014-15.

While Scales also has a storage and logistics division as well as a food ingredients segment, horticulture is the largest by far with an EBITDA of NZ$25.94 million for 2014, the vast majority of which comes from Mr Apple.

"Our Horticulture division delivered another very strong performance in 2014. Both volumes and prices were above expectations resulting in an Underlying EBITDA more than 6% above our prospectus forecast," the company said.

"This excellent result reflects the hard work of the Mr Apple team who are successfully building our brand and reputation on a global scale.

"Investment in marketing, people, additional cool storage space, and maintenance of plant and equipment resulted in some additional cost, however on a per TCE [time charter equivalent] basis Mr Apple is a highly efficient and effective vertically integrated apple producer, packer, and marketer."

The company highlighted more than 420 million apples were picked over the period from more than 1,000 hectares.

"This equates to gross production of almost 3.7m TCEs (on average there were 115 apples in a TCE), from which 2.75m TCEs were exported," the report said.

"This is 7.1% above our prospectus forecast and 47% more fruit than we exported in 2010."

More than a quarter of the apples produced were exported as premium fruit, achieving prices that were 30% above the weighted average for 'traditional' fruit.

"The Mr Apple team is particularly focused on continuing to develop the market for our premium varieties with focus on branding, markets, penetration, and growing techniques to deliver the apple characteristics (size, brix, and colour) sought after by the most discerning customers," the report said, highlighting the category had 38% growth year-on-year.

The leading premium varieties were of the 'Red Sports' denomination that represents Fujis and Royal Galas, with a volume of 574,000 TCEs, followed by Pink Lady (245,000 TCEs) and NZ Queen (134,000 TCEs).

Meanwhile, sales of the traditional varieties were down 3%, led by Braeburn (789,000 TCEs) and Royal Galas (506,000 TCEs).

"Traditional varieties also performed strongly, with prices for Fuji, Jazz, and Granny Smith maintaining or exceeding prices achieved in 2013.

"Whilst Braeburn prices were down from 2013 highs, the 2014 prices compare favourably against long-term averages."

www.freshfruitportal.com