Gumboot maker Skellmax failed to reap the gains it was expecting from its offshore manufacturing, reporting lower half-year earnings yesterday.
The company, which manufactures rubber products and pumps mainly for the dairy industry, saw its net profit drop $328,000 to $5.92 million for the six months to December despite a
$8.2 million rise in revenue to $68.1 million.
Without currency hedging cover it would have been a bleaker result, the company said.
Skellmax - which will change its name to Skellerup Holdings next month - expects a brighter second half and is targeting a full-year net profit of $13 million.
Managing director Donald Stewart said a seven-month delay in relocating its Auckland vacuum pump line to China meant the company had not benefited from lower-cost manufacturing as quickly as he had hoped.
Skellmax now makes 95 per cent of its gumboots in China, and although no further relocations were planned it would move more manufacturing overseas if it made commercial sense.
Stewart said the next three months would be spent bedding in recent acquisitions, although a "never say never" approach meant further acquisitions could not be ruled out.
Local market conditions were expected to remain difficult for the rest of the year as agricultural commodity prices had begun falling and the New Zealand dollar remained high.
"In New Zealand, a drop in farmer confidence has brought some hesitancy to farm spending and this is expected to continue," Stewart said.
Renaming the company after its umbrella Skellerup brand fitted with the company's new direction, and was recognised internationally, he said.
"The name also reflects our heritage of almost a century's success as a supplier of specialised products to agriculture, and progressively to a wide range of manufacturing industries."
