Scott acquisitions done; performance issue now

But one meat robotics project for Scott Technology took longer than expected to commission. Photo: Stephen Jaquiery
But one meat robotics project for Scott Technology took longer than expected to commission. Photo: Stephen Jaquiery
Niche Dunedin engineering specialist Scott Technology has changed tack, signalling it has come to the end of its more than six-year acquisition cycle and now is the time to focus on performance.

Despite its cash-at-hand war chest drying up, from $26.7million as at last August to zero, Scott chairman Stuart McLauchlan was confident there remained strong interest for ''smart automation'' across many industries and countries.

He highlighted revenue growth for the six months to February was up 65% and the order book was ''strong''.

''We've a strong balance sheet and plenty of work in hand,'' Mr McLauchlan said, when contacted in Hawaii yesterday.

There was increased capital requirement in several places during the six months, with final payments coming due for several of the acquisitions and also for the $4million expansion of the company's Kaikorai Valley headquarters in Dunedin.

Revenue for its half-year to February rose by 65% to $111.4million, earnings before interest, tax, depreciation and amortisation rose 33% to $8.47million and after-tax profit rose 62% to $5.07million.

The fast revenue growth was driven 50% by the acquisitions of recent years, and 15% by the organic in-house company growth, Mr McLauchlan said.

The company had a strong order book and sales pipeline which provided the confidence Scott can deliver on its business objectives, he said.

''With our acquisition cycle virtually complete, our management team is focused on improving efficiencies and outcomes,'' Mr McLauchlan said.

Scott posted a strong full-year to August result, with revenue up 18% to $132.6million and before-tax profit up 35% to $14. 9million.

Debt-free and cash-rich at the time, Scott had said then it was still keeping an eye out for complementary, bolt-on acquisitions.

Scott shares traded slightly down at $2.54 after yesterday's announcement, being 22% down on a year ago.

Scott announced a 57% interim dividend increase to 6.6c per share.

Mr McLauchlan said operations in the America's and Europe and Asia produced strong revenue, while contributions from Australia and New Zealand were down, with one meat robotics project suffering from longer-than-expected commissioning times.

On top of those delays getting things running, two mining industry projects were challenged when the deployment of new advanced technology was underestimated, Mr McLauchlan said.

''While disappointing, problems with projects are to be expected from time to time.''

The major factor contributing to operating cash outflows of $9.1million during the half-year was an $11.4million increase in contract work in progress.

-After food manufacturing giant JBS took 50.1% stake in Scott in April 2016, in a deal worth more than $40million, Scott paid off all its debt, plus had more than $25million cash in hand.

simon.hartley@odt.co.nz

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