Skellerup's healthy profit has it looking for more

Donald Stewart

Rubber products manufacturer Skellerup is predicting profit from its regular operations to keep growing this year as it looks for further acquisitions.

Managing director Donald Stewart said at yesterday's annual meeting that the company - famous for making rubber boots - anticipated similar net profit growth to the previous year.

Profit was up 7.2 per cent to $13.4 million in the year to June 2006 which, if replicated this financial year, would return profit of about $14.4 million.

"Skellerup Holdings is confident, in the medium to long term, solid growth will be achieved through the further development of the existing businesses and complementary acquisitions," Stewart said

The company was always looking for acquisition opportunities but there was "nothing sitting there right now".

"Because we hadn't been in the acquisition mode for a number of years then there was a bit of low-hanging fruit out there," Stewart said after the meeting.

The low-hanging fruit this year included Ambic Equipment, Jenco Products, Rubber Services, Thorndon Rubber and Skellerup's biggest purchase to date, Gulf Rubber.

Profit growth would be achieved despite a $4 million hit suffered as five years of currency cover ran out.

"We don't want it [the exchange rate] up where it is right now, to be honest," Stewart said.

"We're covered through to Christmas [at about US60c] and if it's not down after that then it would start to chew profit."

The general economic landscape in New Zealand was playing less of a role in the company's fortunes, with 63 per cent of revenue expected to come from overseas this year.

Chairman Keith Smith, who was re-elected at the meeting, said the firm had continued to develop a low-cost manufacturing strategy with further investment in China, Christchurch and Auckland.

"Through Gulf Rubber we have also gained access to high-quality, low-cost manufacturing options across Asia," Smith said.

One shareholder expressed concern that Smith didn't spread himself any thinner across company boardrooms. Smith light-heartedly said he might not be chairman of one company in a few months - a reference to his role at The Warehouse.

"Stephen's [Tindall] got his own advisers ... the independent committee got their own advisers and I'm conducting the orchestra."