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Skellerup Holdings Ltd is forecasting a loss in the 2007 year, as a result of restructuring costs and following recently experienced slower trading conditions and the continuing strength of the New Zealand dollar.
The company also said today that after an extensive review of Skellerup's business mix and future growth opportunities, its board had determined to specialise as a global technical polymers, mostly rubber, company. That could lead to redundancies at its Christchurch factory.
Skellerup now expects to report net profit after tax (npat) before abnormals of about $9 million for the year ending June 30, compared to $13.4m a year earlier.
After $16m of restructuring costs, it said it expected to report a net loss of about $7m for the June year.
The 2007 result would include a currency impact of about $4.7m on npat between the 2006 and 2007 years.
The company said the consequence of focusing on growth opportunities for technical products, would be the sale of some operations.
Chairman Keith Smith said Skellerup understood the technical rubber industry well.
"It is the heart of Skellerup today. The market is large internationally, but quite fragmented, and thus Skellerup expects to continue to grow by acquisition to build a stronger presence in the larger, higher growth and more valuable markets."
Given the volatility and current strength of the New Zealand dollar, Skellerup intended to further develop its already extensive outsourcing of industrial products for the New Zealand market.
That trend was expected to have its greatest impact on Skellerup's Christchurch factory through a reduction in non-dairy related activities, with the possibility of consequential redundancies.
The impact on earnings due to the proposed restructuring was estimated at $16m, including $10m in non-cash asset writedowns.
For now it was anticipated the company would post a net profit of about $12.5m in the 2008 year, Skellerup said.
"The changes adopted by the board arise from an extensive review of the shape of the business," Mr Smith said.
"They will result in a more focused operating portfolio that better reflects the group's core competencies, the shift in international markets and industrial trends.
"We are confident that these changes will reposition the group for more significant growth opportunities in the future."
New Zealand-based Skellerup is a marketer, manufacturer and distributor of specialised rubber and foam products, footwear and vacuum pumps to agricultural and industrial customers worldwide.
Skellerup shares were down 8c soon after the market opened today to $1.15.
- NZPA
