Skellerup records record half year profit of $13.4m

Red Band gumboots by rubber product manufacturer Skellerup.

Rubber product manufacturer Skellerup has turned in a record $13.4million half year after tax profit, largely through strong growth in its industrial division.

Skellerup upped its interim dividend from 4c last year to 5.5c.

Revenue for the six months to December rose to $120.2million from a year ago, earnings before interest and tax was up 11% to $19.4million, and after tax profit gained 15%, to $13.4million.

Its earnings before interest and tax (ebit) from its industrial division rose 16% on a year ago to $11.7million, its agri-division was up 1% to $9.6million, and corporate costs declined by 9% to $1.9million.

Skellerup chief executive David Mair said the company had continued to grow its business with key original equipment manufacturers in international markets.

Skellerup's capabilities to respond quickly with prototypes and deliver high quality products had increased sales, particularly of its parts for potable water units, Mr Mair said.

Shares in Skellerup rose almost 2% to $2.09 after the announcement, and were up more than 13% on a year ago.

Forsyth Barr broker Damian Foster said the half year result was "solid" and met expectations, describing the industrial division's 16% gain as the "stand out" result.

"Skellerup has highlighted increased sales into potable water applications, which is encouraging to see given this is a key strategic focus," he said.

He said gaining operational efficiencies at plants in New Zealand and China helped drive margin expansion, which offset the impact of lower international dairy prices.

Craigs Investment Partners broker Peter McIntyre said while revenue growth was "softer" than expected, the result was "good", especially the "strong" contribution from the industrial division.

He noted net debt had reduced from $34.8million a year ago to $32.4million.

Chairwoman Liz Coutts said Skellerup was continuing to generate good earnings growth in international markets and had expectations its full-year after-tax profit would fall in a range of $29million to $31million.Forsyth Barr has a profit forecast of $29.9million, and Craigs $30.2million.