Skellerup claws out of recession

Skellerup's Christchurch factory. File Photo.

Skellerup Holdings, the agricultural and rubber goods maker, has begun to pull out of the worst impacts of the global recession, reporting a $3.28 million net profit after tax for the six months to December 31.

While that's a 48.8 per cent drop on earnings to December 31, 2008, it represents a slight improvement and reflects stronger sales and effective cost control than in the last half of the previous financial year, which contributed only $2.6 million of the 2008/09 year's net earnings of $9.2 million.

Earnings per share of 2.03 cents compare with 4.92 cps in the previous corresponding period.

The company expected earnings in the current financial year of "up to $8.5 million", said Skellerup chairman Selwyn Cushing in a statement. In the year to June 2008, before the financial crisis hit, Skellerup produced a $12.6 million profit.

While revenue from operating revenues was down 13.5 per cent on the previous corresponding period at $85.6 million, that was still a 4.6 per cent improvement on the six months to June last year, when the recession was at its worst.

Operating cashflow of $12.6 million was up 19.1 per cent on the same time a year earlier, and up 2 per cent on the previous six months.

An interim dividend of 2 cents a share will be paid on 31 March.

"The Improvement in revenue and NPAT on a sequential basis reflected positive actions taken to lessen the impact of the recessionary conditions by reducing costs and developing new revenue streams through the introduction of new products and markets," said Cushing. "Whilst the recessionary conditions continue to impair business growth worldwide, the results confirms that the impact of our group's operations is diminishing."

There was "growing confidence that the second half of the current year would see a marked improvement in profitability".

"It is clear that the worst of the recession is over," Cushing said.

Skellerup's industrial division earnings for the six months to December fell 38 per cent on the same period a year earlier, but an improvement on the breakeven result achieved in the second half of the last financial year.

Sales of products in the company's agricultural division were down 15.4 per cent and earnings down 25 per cent. Much of the product range is consumables, which require regular replacement, and these outperformed sales of capital goods.

At the half-year mark, inventories appear tightly managed, totalling
$28.268 million at December 31, compared with $35.029 million a year earlier.

The shares last traded at 48 cents on the NZX.