A bit of a change this year as 'Australasia' separates out into Australia and New Zealand
|
New Zealand Manufacturing |
Australia Manufacturing |
Americas Manufacturing |
Europe Manufacturing |
China Manufacturing |
Overall |
Revenue (a) |
$50.948m |
$56.670m |
$52.464m |
$57.885m |
$3.790m |
$221.757m |
Revenue %ge |
22.97% |
25.55% |
23.66% |
26.10% |
1.709% |
100% |
Segment NPBT (a) |
$21.967m |
$0.005m |
($2.073m) |
$4.732m |
$0.245m |
$24.876m (b) |
subtract Admin NPBT Adjustment |
($2.288m) |
($2.545m) |
($2.356m) |
($2.600m) |
($0.170m) |
($9.959m) |
equals NPBT Adjusted |
$19.679m |
($2.540m) |
($4.429m) |
$2.132m |
$0.075m |
$14.917m |
less Taxation (a) |
($3.282m) |
$0.667m |
$1.068m |
($0.736m) |
$0.023m |
($2.260m) |
equals NPAT adj |
$16.397m |
($1.873m) |
($3.361m) |
$1.396m |
$0.098m |
$12.657m |
Notional Tax rate (T / NPBTadj) |
16.7% |
-26.3% |
-24.1% |
34.5% |
-30.7% |
15.2% |
NPAT profit margin (NPATadj / R) |
32.2% |
-3.3% |
-6.4% |
2.4% |
2.6% |
5.7% |
|
|
|
Divisional Interest Income (a) |
$0m |
$0.486m |
$0m |
$0.001m |
$0.073m |
$0.560m |
less Divisional Interest Costs (a) |
($0.153m) |
($0.107m) |
($0.164m) |
($0.321m) |
($0m) |
($0.745m) |
less Admin Interest Costs |
($0.175m) |
($0.195m) |
($0.181m) |
($0.199m) |
($0.013m) |
($0.763m) |
equals Divisional Net Interest Gain/(Expense) (I) |
($0.328m) |
$0.184m |
($0.345m) |
($0.519m) |
$0.060m |
($0.948m) |
EBIT Adjusted (NPBTadj+I) |
$20.007m |
($2.724m) |
($4.084m) |
$2.651m |
$0.015m |
$15.865m |
Notes
a/ Information marked (a) in the above table is straight from Sections A1 and A3 in the annual report. Other rows of information are derived.
b/ But an individual row entry marked (b) is derived.
c/ I use the word 'Adjusted' here in the sense that I have distributed the unallocated costs across the trading business units in proportion to the revenue of those trading units.
Observations from the Above
Sometimes 'scratching below the surface' we can find insights into a business that are not apparent when looking at 'the big picture'. The big picture tells of Scotts as a listed second tier manufacturer with a pot of 'takeover capital' that came on board as a result of JBS taking a controlling stake. Consequently, Scotts continued a push to acquire global technology leading automation businesses around the world. Subsequently some acquisitions have proved more successful than others.
Scott's comes across as an outfit doing clever stuff, but with an array of un-co-ordinated divisions prone to extended development times and project cost overruns that have failed to lift the company's financial sharemarket performance above the mediocre. But look at the 'country by country' divisions, and a much more diverse business-scape unfolds.
1/
New Zealand has been 'by far the star' performer over FY2022. Look at that Net Profit Margin of 32% (consistent with Slide 13 of PR2022 on Meat Industry products). The NPM is even higher at Rocklabs (over 40%)! Wow! I presume it must have been the 'appliance line manufacturing centre' now designated as 'non-core' that brought the NZ NPM overall back to a still laudable 32% overall.
2/ The
United States operation has been 'rocked' by the closure of 'Robotworx' (AR2022 p2). However, put 'www,robots.com' into your browser and 'Robotworx' comes up still trading under the new ownership of: TIE 'The Industrial Experts'. What is that all about?
The reference divisional results for the Americas from the previous year have been restated, I assume because of 'no Robotworx' any more. I was therefore surprised to see such a big EBIT loss in the Americas this year - over $4m. Since the Americas now consists of a small service centre in Dallas, and Transbotics, I assume most of this loss was from Transbotics! If we go back to 2019, the Automated Guided Vehicle market had a target growth rate of 30%+ (slide 14, Scott Presents with Moelis November 2019 Slide Show). Yet a comparison of 'standard product' sales from the Americas (with Robotworx gone, this is all Transbotics now) between FY2022 and FY2021 (AR2022 p43,44) shows no growth in sales.
I wonder if the comment I made above in 'Buffett summarising' what happened over FY2021 has any bearing on what happened at Transbotics over FY2022?
3/ The Bladestop band-saw, made in
Australia as I understand it, saw a 20% growth in installations over FY2020 (PR2022 s13). I make that to be 25 more installations supplied over FY2022, although I am not sure exactly how many bandsaws end up in each installation. Given Bladestop is one of Scott's 'hero' products, I was very surprised to see Scott's Australia in EBIT loss of $2,704m for the year. Management are conservatively estimating that this EBIT result will improve by $3.8m (AR2022 p57). That means an EBIT profit in Australia of $1.1m for 2023
4/
China is showing minimal profit. But look at the turnover. Down two thirds on the previous year. IMV the Chinese result is the result of the ebb and flow of big appliance line manufacturing projects. Last year China was the division with the highest net profit margin of all, and I expect it to bounce back over FY2023.