21 May, 2020

Market update

At our half year results announcement in February, we stated that we were confident that we would retain our momentum for the full year (to 30th June 2020) with increased EBITDA and Net Profit.

When New Zealand moved into Level 4 lockdown we said that this was uncertain given the impacts of Covid-19 on our ability to manufacture and deliver our systems. We can now update shareholders with the following:

  1. In the past month we have secured over $10m of new orders across H&C Automated Solutions, Milmeq and Mercer Stainless. These orders were across the NZ, Australian and US markets.
  2. All of our sites are back operating under level 2.
  3. We have a team back in USA completing the installation of a Milmeq cheese cooling tunnel. We expect another team to be travelling to the USA in June/July to complete the installation of H&C Automated Solutions systems. These employees and contractors have all of the required insurances and other health protections to travel.

We are seeing the benefit of the diversification of the Mercer Group, coupled with the fact that we design and supply essential infrastructure and automated solutions to the food sector. We are therefore confident that the financial year ending 30 June 2020 will see a continuation of the momentum of the first half, and that we will report increased EBITDA and Net Profit at the Mercer Group level. This is largely driven by our automation business, with Milmeq in particular having a good year based on a full order book. Mercer Stainless continues to operate in a very competitive environment in New Zealand.

Our pipeline for new orders remains adequate. Clearly there are significant risks with the global economy, but we are working closely with our customers to ensure that we can continue to design and supply them systems that de-risk their business while also being economic for both them and us. Whilst being a supplier to the food industry is positive and the case for automation in food processing is increasingly attractive, we still rely on capital investment decisions to be made. As of today, we have not seen any potential projects cancelled, but we do stay alert to the changing economic environment.