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.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Trade Agreements: TPP Minus US Starting To Gain Ground

The Japanese government is picking up the pace on reviving the Trans-Pacific Partnership trade and investment deal, with talks scheduled next month among the 11 countries left in the pact after the withdrawal by the US after the election of president Donald Trump. More>>

ALSO:

PACER:

Prices Up 2.2%: Annual Inflation Highest In Over Five Years

"Rising petrol prices along with the annual rise in cigarette and tobacco tax lifted inflation," prices senior manager Jason Attewell said. "Petrol prices in New Zealand are closely linked to global oil prices, and cigarettes and tobacco taxes rise in the March quarter each year". More>>

ALSO:

Undertaxed? NZ Income Tax Rate Second Lowest Among Developed Nations

New Zealand workers pay the second smallest portion of their income to the government among developed nations and less than half the average ratio of their Organisation for Economic Cooperation and Development peers. More>>

ALSO:

Cyclone Cook: Round Up Of This Week’s Weather

One of the significant impacts this week was flooding due to excessive rainfall amounts. Rainfall amounts topped out at 350mm over the past 60 hours in parts of northwest Nelson, with 200mm+ measurements recorded about Coromandel Peninsula, and between 150-200mm in the Kaimai Ranges. Rainfall amounts of between 30-50mm were commonplace elsewhere. More>>

ALSO:

Earlier: Batten Down The Hatches For Cyclone Cook

Although fast-moving, Cyclone Cook will be destructive and MetService Expert Meteorologists have issued Severe Wind Warnings for the whole of the North Island apart from Northland... More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news