Cashed-up Scott Technology delivers strong growth

Stuart McLauchlan.
Stuart McLauchlan
Niche Dunedin engineering company Scott Technology has posted a strong full-year result, with revenue up 18% to $132.6million and before-tax profit up 35% to $14.9million.

Debt-free and cash-rich, Scott is still keeping an eye out for complementary, bolt-on acquisitions.

Scott chairman Stuart McLauchlan said for the year’s trading to August there had been "substantial growth" in revenues across a range of sectors and geographies where Scott operated.

Aside from manufacturing appliance production lines, Scott has diversified into meat industry robotics, subcontractor electromagnets and sampling devices for the mining sector.

Scott shares, which were up more than 50% during the past year at $3.11, yesterday rose 1c after the announcement. Scott’s declared a full-year 10c dividend, up half a cent on last year.

Mr McLauchlan said in all Scott’s key markets there was strong interest in automation and robotics.

"Our customers are looking for ways to increase productivity, improve quality or reduce costs," he said in a statement.

In many markets there was a shortage of suitable workers and introducing automation and robotics was high on the agenda for most Scott customers, but many were struggling with how and when to implement that technology, he said.

"The key challenge for Scott is to help guide our customers through the growing number of technologies and options now available," he said.

When JBS got its 50.1% stake in Scott in April 2016, the deal, worth more than $40million, allowed Scott to pay off all debt, leaving $25million in the bank.

At the August balance date Scott had $26.7million cash in hand and no debt.

"To complement organic growth, the company is seeking suitable acquisitions," Mr McLauchlan said.

He said sales of the Bladestop technology provided an additional boost during the year, as did an increased demand for general industrial automation solutions.

"During the year, cash was used to settle the purchase of the Bladestop technology which has performed well for the company over the last 18 months; initially under licence, but now under full ownership," he said.

Mr McLauchlan said with  forward project work of about 10 months and a "substantial pipeline" of  sales prospects, the board believed the company was well positioned for further growth.

"The forward workload and sales prospects are spread across our full range of activities and have good geographic spread," Mr McLauchlan said.

Scott’s diversification strategy within several sectors was well advanced and not only reduced the risk associated with industry downturns, but also drove organic growth, he said.

Scott intends to complete an up-to-$3million expansion of its Dunedin workshops, with an additional 1500sqm of workspace and up to 800sqm of office space, to lift staff numbers locally  to 84, making of a total 400 around the world.

Last year, Scott delivered a rise of more than 50%  in annual revenue and booked a record $11million before-tax surplus.

Scott’s revenue rose 55% from $72.3million to $112million, its before-tax surplus rose 36% from $8.1million to $11million and after-tax profit rose 66% from $4.76million to $7.93million.

The top contributors to its balance sheet that year came from a 256% rise in the robotic meat-processing sector and a 48% lift in  appliance lines.

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