1 00:00:00,040 --> 00:00:01,880 Speaker 1: And kep what has been a pretty solid week for 2 00:00:01,920 --> 00:00:04,720 Speaker 1: this country. When it comes to solid economic readings. We 3 00:00:04,800 --> 00:00:06,800 Speaker 1: end up with scalar Up, who posted a record return, 4 00:00:06,880 --> 00:00:08,680 Speaker 1: as Andrew alluded to a couple of moms ago. First 5 00:00:08,720 --> 00:00:11,760 Speaker 1: half net profit up twenty percent. They've upgraded the full guidance. 6 00:00:11,920 --> 00:00:14,159 Speaker 1: Graham Leaving is the scaler Up chief executive and he 7 00:00:14,280 --> 00:00:18,360 Speaker 1: is with us. Graham morning, Good morning, Mike, Congratulations, you're 8 00:00:18,360 --> 00:00:19,120 Speaker 1: feeling pretty good. 9 00:00:20,600 --> 00:00:22,800 Speaker 2: Yeah, we are feeling pretty good. Good good first half 10 00:00:22,840 --> 00:00:25,440 Speaker 2: result and a good start to the financial year. 11 00:00:25,680 --> 00:00:28,120 Speaker 1: That terriff news out of America not being as bad 12 00:00:28,160 --> 00:00:30,960 Speaker 1: as you thought, was that you overestimating how bad it 13 00:00:30,960 --> 00:00:33,239 Speaker 1: could be, or have you done something material to get 14 00:00:33,280 --> 00:00:35,800 Speaker 1: around them? Now? 15 00:00:35,800 --> 00:00:38,000 Speaker 2: I think it's the actions we've taken, our people have taken. 16 00:00:38,960 --> 00:00:41,880 Speaker 2: We have a strong presence on the ground in the US. 17 00:00:41,880 --> 00:00:44,319 Speaker 2: We've got fifty people over there, so we understand our 18 00:00:44,360 --> 00:00:48,639 Speaker 2: customers well and we understand the market well. And you know, 19 00:00:48,960 --> 00:00:51,320 Speaker 2: what we've been able to do is not only pass 20 00:00:51,400 --> 00:00:54,600 Speaker 2: on some of that cost in terms of increasing prices 21 00:00:54,640 --> 00:00:57,480 Speaker 2: to customers, but we've been pretty hard on the other 22 00:00:57,520 --> 00:00:59,640 Speaker 2: side of the equation in terms of pushing some of 23 00:00:59,640 --> 00:01:02,120 Speaker 2: the cost out of the business as well. So it's 24 00:01:02,160 --> 00:01:06,200 Speaker 2: the net impact of those actions really, and we always 25 00:01:06,240 --> 00:01:07,880 Speaker 2: had a plan and a target to do that, but 26 00:01:08,240 --> 00:01:10,440 Speaker 2: of course you've got to achieve it. So ye need 27 00:01:10,480 --> 00:01:12,680 Speaker 2: impact to us is less than we might have anticipated 28 00:01:12,760 --> 00:01:13,520 Speaker 2: twelve months ago. 29 00:01:13,680 --> 00:01:16,880 Speaker 1: Is it a quality story? People, even in a tariff environment, 30 00:01:16,959 --> 00:01:18,200 Speaker 1: will pay for good stuff. 31 00:01:20,000 --> 00:01:23,480 Speaker 2: Yeah, it is a quality story. A lot of what 32 00:01:23,520 --> 00:01:27,080 Speaker 2: we make is pretty critical to the customers and applications 33 00:01:27,160 --> 00:01:30,039 Speaker 2: that our products are used in, and we've got some 34 00:01:30,120 --> 00:01:34,400 Speaker 2: long standing customers and relationships in that market. So yeah, 35 00:01:34,480 --> 00:01:38,360 Speaker 2: I think probably we perceive there was some macro risks 36 00:01:38,360 --> 00:01:40,200 Speaker 2: that may impact on demand in the US, and the 37 00:01:40,280 --> 00:01:43,360 Speaker 2: US markets held up a little bit stronger than we 38 00:01:43,400 --> 00:01:46,760 Speaker 2: thought it possibly might. But it is a quality story, 39 00:01:46,840 --> 00:01:50,760 Speaker 2: good products, long standing customers, they have products, sorry, we 40 00:01:50,800 --> 00:01:51,880 Speaker 2: have products that they need. 41 00:01:52,080 --> 00:01:55,480 Speaker 1: Yeah. Eighty two percent of your business is offshore. I 42 00:01:55,600 --> 00:01:58,520 Speaker 1: think most New Zealanders when they think scale ups still 43 00:01:58,560 --> 00:02:00,520 Speaker 1: think gum boots. And you're so much more more than that. 44 00:02:01,040 --> 00:02:03,720 Speaker 1: Of what you do offshore. Is it all going well? 45 00:02:05,920 --> 00:02:08,560 Speaker 2: Yes, it is. And as you say, more than eighty 46 00:02:08,560 --> 00:02:11,480 Speaker 2: percent of a revenue is generated off store offshore, and 47 00:02:12,520 --> 00:02:15,600 Speaker 2: we're an international business in a manufacturing sense as well. 48 00:02:15,680 --> 00:02:18,120 Speaker 2: New Zealand's are very important manufacturing based to US and 49 00:02:18,240 --> 00:02:21,240 Speaker 2: market to US, it's our second largest market, but we 50 00:02:21,320 --> 00:02:24,480 Speaker 2: do manufacture a lot of product in international markets as well, 51 00:02:24,639 --> 00:02:28,120 Speaker 2: so it is a combination of what we do in 52 00:02:28,120 --> 00:02:30,160 Speaker 2: New Zealand and what we do in in other places 53 00:02:30,160 --> 00:02:30,960 Speaker 2: in the world as well. 54 00:02:31,080 --> 00:02:33,720 Speaker 1: How would you argue you're handling what is a pretty 55 00:02:33,760 --> 00:02:36,040 Speaker 1: tumultuous world. For get tariffs in the US, the whole 56 00:02:36,080 --> 00:02:38,440 Speaker 1: world's up in the air at the moment. How are 57 00:02:38,480 --> 00:02:39,000 Speaker 1: you handling that? 58 00:02:41,200 --> 00:02:45,200 Speaker 2: Well, probably just focusing on the things that we can control. Obviously, 59 00:02:45,240 --> 00:02:47,400 Speaker 2: there's been a sequence of events, I guess over the 60 00:02:47,480 --> 00:02:50,400 Speaker 2: last few years. We've had the COVID interruptions and the 61 00:02:50,400 --> 00:02:54,080 Speaker 2: impact that had on time frames to ship products. You know, 62 00:02:54,120 --> 00:02:55,720 Speaker 2: there's some things you can do in the short term 63 00:02:55,720 --> 00:02:58,440 Speaker 2: in terms of beefing up your inventory levels and anticipation 64 00:02:58,560 --> 00:03:01,800 Speaker 2: of changes might materialize, and that's something we did ahead 65 00:03:01,800 --> 00:03:04,360 Speaker 2: of tariff's It was pretty well full shadowed that if 66 00:03:04,360 --> 00:03:06,280 Speaker 2: Trump was elected there was going to be some increases 67 00:03:06,320 --> 00:03:08,880 Speaker 2: in tariffs. So you can give yourself some time by 68 00:03:08,919 --> 00:03:12,720 Speaker 2: taking actions like that in terms of increasing your inventory levels. 69 00:03:13,320 --> 00:03:15,079 Speaker 2: But I think you know, the other really important thing 70 00:03:15,280 --> 00:03:17,880 Speaker 2: is making sure you have people, good people in the 71 00:03:17,919 --> 00:03:21,840 Speaker 2: markets where you are engage with customers and selling products, 72 00:03:22,800 --> 00:03:25,320 Speaker 2: and that gives you a really good chance of being successful. 73 00:03:25,440 --> 00:03:27,600 Speaker 1: It's a great story. Congratulations again us to talk to 74 00:03:27,639 --> 00:03:30,120 Speaker 1: your Graham Leman, who's the scaler up chief executive. For 75 00:03:30,200 --> 00:03:33,280 Speaker 1: more from The Mike Asking Breakfast, listen live to news 76 00:03:33,320 --> 00:03:36,240 Speaker 1: talks that'd be from six am weekdays, or follow the 77 00:03:36,280 --> 00:03:37,720 Speaker 1: podcast on iHeartRadio.