Scales Corporation delivered a record first half in 2026 with revenues soaring 105% to NZ$762.1 million and underlying EBITDA up 18% to NZ$102.2 million. The diversified agribusiness raised its full year profit guidance despite challenges in Europe and the Middle East.
- Revenue doubles to NZ$762.1 million in 1H26
- Underlying EBITDA rises 18% to NZ$102.2 million
- NPAT up 10% to NZ$62.4 million on underlying basis
- Global Proteins and Horticulture divisions drive growth
- FY26 NPAT attributable guidance increased to NZ$55-60 million
Record Revenue Surge Masks Profit Margin Pressure
Scales Corporation Limited (NZX:SCL) has posted a striking 105% jump in first-half 2026 revenue to NZ$762.1 million, propelled by a combination of organic growth and strategic acquisitions completed in 2025. Underlying EBITDA climbed 18% to NZ$102.2 million, while underlying net profit after tax (NPAT) rose 10% to NZ$62.4 million. Despite the top-line surge, margins have compressed, reflecting shifts in business mix and external cost pressures.
The company’s diversified agribusiness model, spanning Global Proteins, Horticulture, and Logistics, underpinned the performance. The Global Proteins division benefited from increased stakes in Fayman International, ANZ Exports, and Meateor Australia, boosting sales volumes and revenue. However, the division’s EBITDA margin was dented by the consolidation of lower-margin Edible Proteins trading operations and challenges at the Esro Petfood joint venture in Europe.
Horticulture’s Premium Apple Strategy Accelerates Sales
Horticulture’s contribution grew 8% in underlying EBITDA to NZ$57.6 million, driven by a strategic pivot toward premium apple varieties targeting Asia and the Middle East. Mr Apple, the company’s flagship brand, saw a faster sales run-rate with 66% of the 2026 export crop sold by June, up from 54% the prior year. Premium varieties like DazzleTM and PosyTM now represent approximately 79% of export volumes, up from 74% in 2025.
Geopolitical tensions in the Middle East have complicated market access and increased freight and fuel costs, but strong demand from Asia has largely offset these headwinds. The juice business, Profruit, maintained steady sales volumes, particularly in the US market.
Logistics Navigates Fuel Costs and Freight Disruptions
Scales Logistics recorded modest revenue growth of 1.6% to NZ$74.5 million, with underlying EBITDA slipping 6% to NZ$5.7 million amid ongoing global fuel price volatility. Sea freight volumes rose 2.3%, mainly due to horticulture exports, while air freight volumes surged 19.3%, driven by the dairy sector. The division’s ability to increase air freight helped mitigate margin pressures in sea freight.
Balance Sheet Strength and Working Capital Dynamics
The group’s net debt increased to NZ$106.7 million from NZ$67.5 million a year earlier, reflecting seasonal working capital demands and the impact of acquisitions. Management expects net debt to moderate in the second half as horticulture working capital unwinds. The company has extended its term debt facilities with Rabobank and Westpac through to July 2029, ensuring financial flexibility.
Esro Petfood Control and Operational Challenges
In June 2026, Scales obtained control of Esro Petfood B.V. following the bankruptcy filing of its joint venture partner, Esro Food Group B.V. The acquisition was accounted for as a step acquisition with no goodwill recognised. Esro Petfood has been a drag on earnings, reporting an underlying loss of NZ$5.8 million for the half, with supply and demand disruptions increasing losses since April 2026. Stabilising Esro’s European operations is a key strategic priority.
Guidance Raised Despite Geopolitical Risks
Buoyed by the strong first half, Scales raised its full-year 2026 guidance for underlying net profit after tax attributable to shareholders to between NZ$55 million and NZ$60 million, implying an underlying NPAT range of NZ$72 million to NZ$78 million and EBITDA between NZ$135 million and NZ$142 million. The board acknowledged ongoing geopolitical tensions in the Middle East and cautious supply conditions in Global Proteins as risks to watch.
Chair Mike Petersen and Managing Director Andy Borland credited the company’s people for delivering the record result amid a challenging global environment. The group is advancing sustainability initiatives, including a refreshed climate risk analysis and a new Group-wide People Strategy.
Investors will be watching how Scales balances its aggressive growth ambitions with margin pressures and geopolitical uncertainties, particularly the recovery of Esro Petfood and the evolving dynamics in premium apple markets.
Bottom Line?
Scales Corporation’s record revenue and raised profit guidance highlight growth momentum, but margin pressures and geopolitical risks warrant close monitoring as FY26 unfolds.
Questions in the middle?
- How will Scales stabilise and integrate Esro Petfood under its control?
- Can premium apple sales growth offset rising costs and geopolitical disruptions in Horticulture?
- What impact will ongoing fuel price volatility have on Logistics margins in the second half?