Scales Corporation (NZX: SCL), the group behind one of New Zealand's leading fruit brands Mr Apple, has surpassed 2015's record profit by 6% to hit NZ$38.6 million last year.

"Once again the entire Scales team, which now extends to more than 600 permanent staff members, have excelled themselves to deliver an outstanding result," chairman Jon Mayson said in a release.

Mayson noted excellent results in Scales' horticulture and food ingredients divisions, as well as "another consistent outcome for the storage and logistics division.

Managing director Andy Borland referenced several changes that took place during the year with good progress on several strategic fronts.

"These include the acquisition of integrated Hawke’s Bay grower, packer and marketer of apples Longview in November, welcoming China Resources as a strategic shareholder in Scales with an approximately 15 per cent shareholding, and an increase in our shareholding in apple marketing business Fern Ridge to approximately 73 per cent," Borland said.

"Longview is well-regarded in the Hawke’s Bay with a strong and proud history spanning more than 100 years. 

"The purchase also included 22 hectares of orchard immediately surrounding the Longview packhouse as well as entering into a lease for a further 17 hectares of nearby apple orchards."

He said Longview provided a compelling strategic rationale for Scales with its plantings complementary to its Asian and Middle Eastern consumer focus.

"During 2016, Longview sold approximately 62 per cent of its apple crop to this region. In addition, Longview’s packing and coolstorage facilities ideally complement our existing post-harvest facilities," Borland said.

"In addition, Longview’s packing and coolstorage facilities ideally complement our existing post-harvest facilities. The Longview operations are located nearby, providing opportunities to improve post-harvest specialisation as well as increasing overall group-wide capacity to meet expected production growth.

He added the group was "extremely pleased" to have the strategic support of China Resources, which through its extensive networks was well positioned to assist with growth through China and the rest of Asia.

"To further assist sales into this region, we have been making significant investments in marketing resource, presence and collateral," Borland said.

"A number of new initiatives were introduced in 2016 and these will continue to be developed through 2017 to enhance our leading market position."

Underlying EBITDA for the horticulture division was even better than for the company overall, rising 13% to NZ$45.3 million.

"This improvement in profit was largely driven by a significant increase in export volumes sold which were up by 12 percent to 3.55 million TCEs (tray carton equivalents)," Borland said.

"The growth in export volumes was mostly influenced by a strong export ‘packout’ (percentage of fruit deemed suitable for export) due to a good crop displaying positive colour, size and taste qualities.

"The weighted average price achieved for our apples was also up slightly on 2015 levels. This was influenced by improving varietal and market mix as well as improved pricing on traditional varieties."

He also highlighted the launch of the apple variety Dazzle in December, which had taken 20 years to develop.

"his apple is aimed at Asian consumers in particular, but has also attracted attention worldwide. In line with our strategic focus, Dazzle is the first of what we hope will be a succession of branded plant variety rights in which we have an interest," Borland said.

www.freshfruitportal.com