Skellerup lifts first-half profit 17.2% to a record

Feb. 23 (BusinessDesk) - Rubber products company Skellerup Holdings lifted first-half profit 17.2 percent to a record despite some worsening market conditions, particularly in Europe and Australia.

Net profit for the six months ended Dec. 31 rose to $11.5 million from $9.8 million in the same six months of 2010.

Revenue in the six months rose 6.9 percent to $103 million while earnings before interest and tax (EBIT) rose 14.2 percent to $17.7 million.

Chief executive David Mair said Skellerup has been repositioned so it can grow earnings even with relatively flat sales and increasing competition.

“Across the group, we are reviewing strategic options to accelerate growth and profitability," Mair said. "We continue to actively pursue the development and introduction of new products, allowing not only growth from existing customers but also access to new markets and customers.”

The industrial division lifted EBIT 12.5 percent to $11 million on a 5 percent sales increase while the agri division's EBIT rose 11.1 percent on a 10.7 percent sales increase.

“Both the agri and industrial divisions have performed well throughout the period,” Skellerup said.

The industrial division made good progress in developing the driveshaft coupling begun in Gulf Rubber Australia with further development in Vietnam.

“This product is being marketed and developed with key customers, mainly in the European market,” the company said.

The industrial division also achieved very good growth from the sale of vacuum pumps to the US oil and gas markets.

The agri division's result reflected improved factory efficiencies, growth in the international and local markets for dairy liners and filters and some improvement in demand for products of a more capital nature, reflecting ongoing confidence in the dairy industry worldwide.

Chairman Sir Selwyn Cushing said he expects market conditions will remain challenging.

“Nevertheless, with the strategies now entrenched and from the record results achieved for the six months ended Dec. 31, it is clear that Skellerup can continue to improve earnings despite these uncertain times,” Cushing said.

He reiterated previous guidance that net profit for the year ending June will be between $22 million and $23 million, up from the previous year's record $20.2 million.

Forsyth Barr analyst John Cairns says the result was in line with his forecast – “a good result from both divisions.”

Skellerup will pay a fully imputed first-half dividend of 3 cents per share, up from 2 cents last year.

Skellerup shares are down 1 cent at $1.42, just below the year high at $1.45 reached earlier this month but well up from $1.11 in August last year.

(BusinessDesk)

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