I would now like to hand the conference over to Mr. Andy Borland, Managing Director. Please go ahead.
Good morning, everyone. I'd like to welcome you to the Scales full-year results announcement for the year ended 31 December 2024, with me as Steve Kennelly, Scales CFO, and Geoff Smith, our Chief Operations Officer. Earlier this morning, we launched our results with NZX, including a slide pack that we'll base our comments on during this call. We'll run through the slides and then take questions. If you've got further questions after the call, we'll be available for the rest of the day. Respecting an agenda, we'll go through the results and performance for 2024, then provide you with our current outlook for 2025. Moving on to slide five, a summary of 2024's results.
I'm delighted to report a record group performance with underlying EBITDA of NZD 91.7 million, an underlying NPAT of NZD 53.6 million, underlying NPAT attributable to shareholders towards the top end of guidance at NZD 34.3 million, and reported NPAT attributable to shareholders was almost up 500% compared to last year at NZD 30.7 million. These results were produced while we delivered on our growth strategy. Regarding each of the divisions, Global Proteins delivered a strong result. Horticulture's performance is returning to more normal levels, and there was a record result from Logistics. Turning to slide six, as usual, we've highlighted a few of our key numbers, most of which I'll touch on further during the presentation. As ever, each of these numbers are a tribute to the skill and effort of our Scales team. They've continued to deliver outstanding results in a period of change for the group. I'll now pass over to Steve to run through the financial results for the year.
Thanks, Andy. Slide eight summarizes our group financial performance on both an underlying and reported basis. As Andy mentioned, the group achieved record underlying EBITDA and record underlying NPAT. Underlying NPAT attributable to shareholders of NZD 34.3 million was towards the top end of our previously advised guidance range. Reported NPAT attributable to shareholders of NZD 30.7 million was up significantly on last year's profit of NZD 5.2 million. Lastly, group revenue was up 3% on last year to almost NZD 595 million. The graphs on slide nine summarize our five-year performance for underlying NPAT attributable to shareholders, underlying EBITDA, and revenue. Slide 10 gives a divisional overview, and we're delighted to report underlying EBITDA growth across all our operating divisions. Global Proteins generated a strong underlying EBITDA of NZD 55.4 million, noting that Meateor Australia and Esro Petfood are continuing on their startup journeys.
Horticulture's performance is returning to more normal levels with underlying EBITDA of NZD 37.7 million. More consistent fruit quality and recovering global markets resulted in increased volumes and higher average prices, and Logistics produced a record underlying EBITDA of NZD 6.9 million, which was supported by higher volumes of both ocean and air freight. Slide 11 summarizes our divisional performance. In addition to underlying EBITDA growth, there was also margin growth in each of the divisions. Slide 12 illustrates the five-year underlying EBITDA trends by division, noting the increased earnings from Horticulture compared to the previous two years and the record earnings from Logistics. Slide 13 gives a summary of our financial position, which continues to be strong. Net cash is in line with last year despite the cash outlay required for M&A transactions that were executed throughout the year. Other significant expenditure included dividend payments, including those to minority shareholders and CapEx. I'll now hand back to Andy.
Thanks, Steve. I'd like to start with recapping the key points of the transactions that Steve mentioned. In Horticulture, we acquired around 240 hectares of orchards from the Bostock Group and sold around 186 hectares to Craigmore Sustainables, a net increase of approximately 54 hectares. However, we're leasing back Blyth Orchard from Craigmore until the end of 2027, which is around 98 hectares. There's a high concentration of Dazzle planting on the acquired orchard, which complemented our strategy of focusing on higher margin premium apples. We're also delighted to acquire 50% of Profruit from Bostock to now make it a wholly owned subsidiary of Scales. In Global Proteins, we increased our investment in Meateor Australia from 33% to 50%, bringing our total investment in the business to AUD 11.5 million. All these transactions are strategically important, and pleasingly, the overall net impact on our 2024 result was negligible.
Moving on to the Global Proteins division, while there was a slight decrease in revenue for the division, there was an increase in underlying EBITDA compared to last year. There were also increases in both Petfood ingredient volumes and edible proteins volumes of 11% and 28% respectively. I'd just like to mention that these volumes numbers include volumes from all divisional businesses, including our joint ventures. In terms of each of the businesses within the division, Shelby's result was strong again, in line with last year. A good result while it sets up for its next growth phase. Meateor New Zealand and Fayman produced strong volume growth, and as Steve mentioned, Meateor Australia and Esro Petfood continued to progress through their respective startup phases.
There was strong volume growth in both businesses, with Meateor Australia operating profitably during 2024 and Esro expected to move into profitability by the end of 2025. Revenue and margin per kilogram of volume sold within our Petfood ingredients businesses have decreased slightly compared to last year, primarily due to increased volumes from Meateor Australia and Esro Petfood , whilst they're still in startup mode. Slide 20 gives an update on the nine key strategic projects that underpin the growth target in Global Proteins. A number of them, as shown on the left-hand side of the slide, are nearing completion, such as the Toll Processing Plant in the USA that was commissioned last year and Meateor Australia, which moved into profitability last year.
Other projects have a longer time frame associated with them, such as our second in-plant collection and cooling system in the United States and a second European location. We'll continue to update you with their progress. Moving on to Horticulture, improved apple volumes, quality, and average prices helped Horticulture return to a more normal performance level. Its integrated business model and increased focus on premium varieties and overall variety mix also proved beneficial. Profruit has delivered an exceptional performance assisted by a high level of processed fruit and export volumes. There was an 11% increase in Mr Apple 's own growing export volumes compared to last year. This was aided by the team undertaking numerous promotions and customer support in key markets, some of which I'll touch on later. The proportion of premium apples volumes also increased compared to last year from 64% to 72%, in line with our strategy.
There was growth across all premium varieties, but pleasingly, there was significant growth in Dazzle, Posy, and New Zealand Queen. As I've mentioned, Profruit delivered an excellent result, selling a record volume of juice concentrate, which is up 35% compared to last year. These graphs on slide 23 illustrate the 10-year summary of premium apples sales and of Mr Apple 's own growing export volumes. As you'll note, the proportion of premium apple volumes to total apple volumes shows a pleasing upwards trend in line with our strategy. The graph on slide 24 depicts our actual apple volumes from 2020-2024 and our forecast volumes from 2025-2027. It's estimated that premium varieties will account for around 75% of export volumes by 2027 as a result of acquiring the Bostock Orchards, as well as the ongoing orchard redevelopment program at Mr Apple .
Slide 25 summarized horticulture's average apple prices and also the foreign exchange rates experienced by the business. There was overall price growth for both traditional and premium varieties, helped by positive market sentiment, improved fruit quality, favorable exchange rate, and also marketing and promotion activity. As mentioned, Mr Apple 's marketing and branding team were very active during the year. They were focused on the China and other key Asia markets, and a sample of activities are shown on this slide. Excitingly, Zoe Hobbs, the New Zealand track and field sprinter and Oceania record holder for the 60 and 100 meters, is now a brand ambassador for Dazzle. We expect this to be a positive partnership for both Zoe and Mr Apple . Onto logistics and their record result.
Both ocean freight and air freight volumes were up on last year at 16% and 71% respectively, which generated a 61% increase in underlying EBITDA. The new Auckland warehouse and chiller facility has been beneficial, processing a strong level of air freight volumes, and the division continues to prove its strategic value to both internal and external customers. Moving on to capital management, overall group ROCE was 14.5% this year, above our group target of 12.5%. Global Proteins and Logistics both continued to produce excellent returns, with Horticulture continuing to improve. Horticulture accounted for the majority of CapEx, which included several margin improvement projects such as the ongoing orchard redevelopment program. As previously mentioned, Global Proteins also invested in a new toll processing plant as well as a new in-plant collection and cooling system in the United States. Now, on to sustainability.
We've continued to progress our sustainability goals this year and will be releasing our second climate-related disclosure report in April, which will provide the detail behind our journey. In the meantime, this slide summarizes some of the initiatives undertaken in 2024, with people being a main focus. We made two significant appointments to the group, being a Chief Risk Officer and a Global Safety Officer. Health and safety continues to be top of mind. We also progressed leadership development at Mr Apple and employed RSE workers from Fiji's Kia Island. This work helped them with rebuilding efforts back at their home after a devastating cyclone. Environmental programs were progressed, including a new wastewater plant at Shelby's Amarillo facility in the USA. Mr Apple also re-established the regenerative trial at Kinross Orchard, which had been lost during Cyclone Gabrielle. Lastly, our outlook for 2025.
We're pleased to confirm our previously advised guidance range of underlying NPAT attributable to shareholders of between NZD 35 million to NZD 40 million. In respect of Global Proteins, we expect that strong financial performance will continue. Meateor Australia and Esro Petfood will continue to progress through their startup phases, and we expect Esro to join Meateor Australia into profitability by the end of the year. Within Horticulture, picking and packing has commenced for the 2025 season, with initial crop indications being positive. A crop of around 3.5 to 3.4 million TCEs is forecast, and we expect a higher proportion of premium apples within that crop. Positive movements in pricing are also forecast. Profruit is also currently experiencing positive demand. We expect Logistics to continue to perform well despite the ongoing geopolitical uncertainty that's expected to affect trade routes and market stability.
Respective dividend payments are expected to be made in two installments. The first installment of NZD 0.0725 per share was paid in January this year and will review and advise on the second installment in early May 2025. We expect total dividends will be split approximately evenly between interim and final and to be between 50% and 75% of underlying net profit after tax attributable to shareholders. As previously signaled, due to the increasingly offshore nature of the group's earnings, it's likely that dividends after 2024 will be partially rather than fully imputed. That ends our formal presentation today. However, please note that the Appendix A of this slide pack provides additional financial information and reconciles underlying earnings to reported earnings for each of our divisions as well as the group. We're now happy to take questions.
Thank you. If you wish to ask a question, please press star one on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Guy Hooper from Jarden. Please go ahead.
Good morning, team. Congratulations on a good result. On the horticulture side, I mean, you've previously talked about a 15% margin as being a sustainable level and a medium-term target. I mean, is that still the case? How should we think about horticulture margins going forward, particularly given the change in the underlying orchards?
Certainly, I think we can head back in that direction. Yeah, it's really as we push all of the margin enhancement initiatives into play. I mean, clearly, the higher volume of premium apples is a big part of that. So as we get more Dazzle and Posy, continue with the NZ Queen, we're expecting to see that margin return to, yeah, I'm not going to commit. I don't think it's quite 15 right at the moment, our target, but it's in that direction. And we certainly expect the overall ROCE to be into double figures sooner rather than later.
Okay, so still more room for improvement over the next couple of years?
Yes. Yes, definitely.
Great. And just one on the food ingredients side. I mean, you've got a number of projects coming on the line over the next couple of years or come online in Q4. Can you talk a little bit about the incremental volume and incremental EBITDA you're expecting to see from these as we kind of bridge it towards that NZD 70 million target that you had?
Yeah, I mean, it's hard to sort of comment on specifics in terms of the individual businesses, but I think as we see that volume come on, we probably will see margin depreciation just because we're probably moving into more pork. But yeah, obviously, as that volume comes on, we're expecting a reasonable uplift in EBITDA. It's more about, I think, in this stage, Guy, getting the factories up and running, all the implementation that goes on there with audits with customers and efficiency gain as the thing hits production levels. That's when we'll see the margin uplift come when the factories are full and running double shifts, etc.
Great. And just one last one for me on the balance sheet. I mean, NZD 12 million of cash, you've talked about M&A multiple times in the past, Salmon being a focus. I mean, maybe just can you answer a little bit? Now that the earnings base has sort of broadened out and appears to be a bit more stable, can you give us an indication of what sort of size you would look, acquisition you might look to do on balance sheet?
Without new capital?
Yeah.
Yeah. Well, we could probably handle a NZD 100 million transaction, but we certainly do not have a desire to be heavily geared. So whether or not, yeah, but certainly could handle a NZD 100 million transaction at the moment.
Great. I'll pause there. Thank you very much.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone. Your next question comes from Joshua Dale from Craigs Investment Partners. Please go ahead.
Morning, Andy, Steve, Geoff. First question on Meateor International. Do you have the timing on the winding down of that this year?
Well, that's sort of been happening, hasn't it?
Yeah, it's pretty much done, Joshua. That'd be a very, very small contribution in the FY 2025, and after that, we think it would probably be nil.
Got it. Okay. And given your revenue from Global Proteins can only be from Shelby and Meateor International, did the wind down of Meateor International explain your 11% revenue drop in that division?
Yeah, probably contributed to it for sure. Yeah.
Brilliant. More of an accounting question, and then lots of the accounts. Is there any reason why Fayman and Meateor Australia are combined, whereas the other JVs?
No, not really. Yeah, not really. We'll endeavor to split those out in future reporting periods. It's just, I think, we have up until now, we've combined them, and we continue that practice, but I think probably provides more information if we do split them out.
Okay. Yeah, that'd be helpful. Last question. I think you had some thoughts potentially at some point about maybe entering the poultry market. Just interested in how that thinking is going.
We're in fish now, and we are working hard to investigate ways of getting into poultry, so yeah, that's certainly a 2025 initiative.
Okay. Brilliant. Look forward to any further thoughts on that going forward. Thanks very much, guys. Well done on another solid year.
Thank you.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone. Your next question comes from Matt Montgomerie from Forsyth Barr. Please go ahead.
Hi guys. Good morning. Just on Profruit, you've commented on you've delivered very strong volume growth, and can see in the notes to the accounts you've disclosed the revenue in that business. Are you able to provide, I guess, a sense of underlying EBITDA and impact from Profruit in FY 2024?
Yeah, in 2024, it's sort of probably it got to just early NZD 5 million. And looking forward, it's going to be more like, oh, sorry, I'm being corrected here. It hit NZD 6 million in 2024 for an EBITDA. But I mean, you have to realize that their volumes did go up because as a bit of that extra volume come from the orchards being impacted by the cyclone. So the volumes are probably going to normalize a bit more this year, and that EBITDA performance will be more in the NZD 4 million range rather than NZD 4 million-NZD 5 million rather than NZD 6 million.
Okay. That's useful. Then secondly, just on your guidance for FY 2025, do you mind just commenting on what you've assumed in terms of the uplift from the Bostock transaction? I think we were talking about a NZD 6 million-NZD 8 million net pre-tax number, and that's to be phased. What of that is coming through in FY 2025?
Yeah. So that 6-8, I think, is a long-term number. So it wouldn't be that number in FY 2025. Obviously, there's an immediate positive impact from Profruit given that it's fully consolidated, and then will be a positive impact from the orchards. There will be an impact in the conversion from organic to conventional, and we've allowed for that. So yeah, I don't have the exact number, but it certainly won't be that top end.
Yeah. Might it be half of that number in 2025? Or just trying to get a sense of underlying?
Yeah. I'd say I think that would be fair, Matt.
Thank you. And then just on corporate costs, Steve, there's quite a big step up in the second half. Are you able to give us either guidance for FY 2025, or should we be analysing that second half? Just trying to get a sense of what drove that and if it's recurring.
Pleasingly, I think for management, Matt, that uplift is STI bonuses because we've achieved our targets, so we don't assume that that's going to happen when we budget and put guidance into the market, so that wouldn't be included in FY 2025's guidance, and that's why that's a big uplift in the second half.
Okay. So FY 2025 in your guidance might be back to, say, seven at an EBITDA level or something?
Yep. Yep.
Perfect. And then just on proteins, are you essentially saying in your guidance that you're expecting largely flat Global Proteins EBITDA in FY 2025 versus FY 2024?
Close to a little bit of increase, but again, it is this transition year again as we push these new projects into full production.
Yeah. Okay. And then just maybe a follow-up. When you set the NZD 70 million FY 2027 target back in June last year, is what you're saying now for FY 2025 in line with your expectations? If you had a guidance for FY 2025 in June, is this roughly the number that would have come out?
Yeah. I think, Matt, we're probably behind on the Esro startup. As you would have noted from previous communications, we expected that to be operational last year, but obviously, we pivoted and decided to redevelop in the Netherlands, so look, that put us back a little bit, but I think if you look at the other projects that we've got online, they're largely on track with where we expected, so yeah, we're tracking the right direction. Esro is more of a delay than us. Esro has just been delayed because we shifted. The whole processing factory was going to be in Belgium, and now it's in the Netherlands right beside the edible plant of our partners.
Yeah, and presumably, that's not overly material anyway.
No. No.
Sorry. Just going to hit you with one more. You've called out within your logistics performance, there was sort of a one-off impact around some air freight volumes. Is that material enough to call out and then ultimately the flow-on impacts into 2025?
Yeah, it was a material number. We hadn't assumed a significant or a similar impact in 2025, no.
Awesome. Thank you. Appreciate it.
Thanks.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Borland for closing remarks.
Folks, thanks very much for joining the call, and we appreciate it, and we'll look forward to updating you again soon. Thanks very much.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.