Improving second half boosts Skellerup

Photo / Simon Baker

A stronger second half boosted Skellerup Holdings' full year net profit from continuing operations after abnormals to $14.5 million, up 48.7 per cent from the year before.

Group revenue for the second half of the year to June was up 16.1 per cent, negating disappointing first half revenue figures, so for the full year revenue was in line with the previous year at $180.7m, Skellerup said today.

Net profit was $11.96m from $9.18m the year before.

"A marked shift in trading conditions was felt in the third quarter and subsequently gained further momentum in the fourth quarter," the company said.

Improved sales, together with a focus on operational efficiencies across the group, produced the improvement in net profit for the full year.

Features of the strong second half by the Industrial division included increasing demand for the core range of pipe rings, gaskets and appliance industry requirements, and growth in the supply of drive shaft couplings to the automotive industry, Skellerup said.

Sales in the division for the second six months were 13 per cent ahead of the first six months with divisional earnings 158 per cent ahead at the ebit (earnings before interest and tax) level.

A final dividend of 2.5c per share is to be paid.

Agri division sales for the second six months were 9.3 per cent ahead of the first six months with divisional earnings 40.1 per cent ahead at the ebit level.

"This reflected increasing demand for our core range of consumables including liners, tubing, filters and footwear, which is continuing into the new financial year," Skellerup said.

Demand for items of a more capital nature, such as dairy vacuum pumps, remained suppressed, due to lower investment in dairy conversions despite the reasonably positive outlook for the dairy industry.

Group debt was cut from $64.7m to $26.6m, with $20.7m of the reduction from a two-for-five rights issue, the company said.

Despite the improving second half, Skellerup was wary about the outlook for its overseas markets in light of recent economic data.

The data from the United States, Europe, and to a lesser extent Australia, could mean growth in those markets for the company's industrial products might be more gradual and patchy than initially expected, Skellerup said.

With the northern hemisphere summer vacation period coming to an end, the next few months might provide a better guide.

The company expected net profit for the current year to be between $16m and $17m, with the outlook for the Industrial division generally continuing to be positive.

Intensive product development in technical polymer products for niche markets was driving the opportunity for growth in revenue from existing and new customers, the company said.

Shares in Skellerup were up 2c to 75c around 11am.

- NZPA