Hellaby Holdings, the diversified investment company, posted a 65 per cent drop in first-half profit with revenue from three of its four segments falling, but says it expects a better second half as it tries to sell its loss-making footwear division.

Net profit fell to $4.7 million in the six months ended December 31, from $13.5 million a year earlier.

This was at the upper end of its forecast, the company said, having downgraded its earnings outlook last year. In December, it said earnings were likely to fall in the first half of the financial year, projecting trading earnings before interest, tax, depreciation and amortisation (ebitda) of between $16.5 million and $20.5 million, "well below" the $28.7 million in the year earlier period. Trading ebitda fell 34 per cent to $19 million in the first half, on a 2 per cent fall in revenue to $379.9 million.

The board yesterday confirmed its earlier outlook for a better second half, and said group earnings for the full year "will be broadly in line with the record results achieved last year," when the company posted an annual profit of $23.4 million, or 28.6c per share.

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"The Hellaby group is moving to a new focus, building on our existing base," said managing director Alan Clarke, who started the role in November. "I believe we have a great future as a long-term business builder and owner. We do not have to develop new sectors as some of the current sectors we operate in offer considerable scope for attractive long-term expansion."

The board declared a 9c dividend, with a March 23 record date, payable on April 1. The company's shares closed down 1c yesterday at $2.63.

Operating profit in the company's oil and gas services segment fell 91 per cent to $711,000, on a 19 per cent fall in revenue to $83 million. In December, it warned sales in the division would be "well down" due to delays in several large contracts which are now scheduled for the second half of the year.

"While this is disappointing, timing of major refinery shutdown contracts is the reason for this very soft result," Clarke said. "While the earnings in the resource services group are lumpy, they are in fact predictable over a longer period, with sustained growth achieved in the last 25 years and margins available through these specialised technical services that are attractive."

The company is exploring several investment opportunities, he said, and is looking to expand geographically and provide new services.

Its equipment division also faltered, with operating profit down 20 per cent to $3.6 million, on a 10 per cent rise in sales to $104 million. The group's sales and maintenance of market share came at the cost of margin, Clarke said, as sales of new equipment were affected by a slowing economy.

"The challenge for this group is that margins are small and the investment is large, and this is an important consideration for determining our future strategy," Clarke said.

Clarke reiterated the company's plans to sell its "non-core" footwear division, Hannahs and Number One Shoes. This is despite the segment narrowing its loss to $587,000 in the first half, from $1.7 million a year earlier, on a 2.8 per cent fall in sales to $66.6 million. Hannahs had some same-store sales growth, but Number One Shoes sales shrank year on year.

The automotive business showed sales growth of 27 per cent to $125 million, though operating profit fell 4.6 per cent to $11.5 million.

Hellaby Holdings

Six months ended December 31

• $379.9 million revenue, down 2 per cent.

• $4.7 million net profit, down from $13.5 million.

• 9c a share dividend.