Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Mercer Group expects FY earnings to fall on hiring intention

Mercer Group expects annual earnings to decline as it employs more staff; shares drop

By Tina Morrison

Feb. 28 (BusinessDesk) –Mercer Group, the stainless steel fabricator, expects annual earnings to decline this year as it invests in more staff in anticipation of future earnings growth. The shares dropped 4.8 percent.

Mercer expects earnings before interest, tax, depreciation and amortisation of about $2 million in the year ending June 30, down from $2.5 million last year, the Auckland-based company said in a statement. First half EBITDA slipped 19 percent to $1.1 million as the company employed more staff.

The company’s shares fell 1 cent to 20 cents, making them the second-worst performer on the New Zealand stock exchange All Ordinaries Index today.

“The directors believe the company should continue to invest in people and technology to drive sales growth and increase profitability in the medium term,” the company said. “The investment in people will impact earnings for 12 months as we front load the expense to lift medium term performance.”

When announcing its annual earnings last year, Mercer said it expected better earnings this year as it focused on improving its operating performance following a restructuring and repositioning of the company in 2012. In the first half, net profit dropped 31 percent to $407,000 as revenue slipped 2.3 percent to $21.4 million. Staff costs rose 9.7 percent to $6.8 million.

During the first half, the company gained an extra $1.7 million in funds from the issue of new shares at 5 cents apiece, and subsequent to the Dec. 31 balance date, it has received a further $1.2 million from the issue of new shares at 7 cents each.

Mercer said the funding supports its near term organic growth aspirations and it is currently considering an acquisition it believes would be complementary to its business. It didn’t provide further details.

No dividends were paid in the first half, consistent with the year earlier period.

The company said its largest stainless business reported a 67 percent drop in EBITDA to $642,000 and a 17 percent drop in revenue to $14 million as some jobs didn’t achieve expected margins, the move of Titan manufacturing to Christchurch took longer than expected and as it increased staff in advance of expected Titan and Mercer equipment growth. A stronger second half is expected as the order book is full through to the end of June but the unit will face higher costs as it continues to invest in staff, it said.

Its interiors unit, which supplies sinks, basins, tubs, toilets and similar products, also posted lower earnings, down 39 percent to $64,000 as increased staff costs outpaced a 19 percent rise in sales to $4.7 million. The company’s secondary distributor in Australia was put into administration in January owing Mercer money, the company said, without providing details.

Mercer’s corporate unit turned to a profit of $305,000 from a loss of $724,000 in the year earlier period as it booked new sales of $996,000 after signing a license agreement with a large multinational North American company for its S-Clave technology.

Meanwhile its medical unit, which supplies equipment for sterilisation, washing and disinfection, posted a six-fold increase in earnings to $97,000 as it boosted sales 57 percent to $1.8 million. That is expected to grow in the second half, the company said.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Postnatal Depression: 'The Thief That Steals Motherhood' - Alison McCulloch

Post-natal depression is a sly and cruel illness, described by one expert as ‘the thief that steals motherhood’, it creeps up on its victims, hiding behind the stress and exhaustion of being a new parent, catching many women unaware and unprepared. More>>


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Health: New Zealand's First ‘No Sugary Drinks’ Logo Unveiled

New Zealand’s first “no sugary drinks logo” has been unveiled at an event in Wellington... It will empower communities around New Zealand to lift their health and wellbeing and send a clear message about the damage caused by too much sugar in our diets. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news