Scott Technology lifts first-half profit 26% as demand pushes operations near capacity
By Paul McBeth
April 5 (BusinessDesk) - Scott Technology boosted first-half profit 26 percent as demand for the Dunedin-based firm's automation and robotics systems saw it operating near full capacity.
Net profit attributable to shareholders rose to $3.1 million, or 4.2 cents per share, in the six months ended Feb. 28 from $2.5 million, or 3.3 cents, a year earlier, it said in a statement. Revenue climbed 19 percent to $67.5 million, helped by international demand for its Bladestop bandsaw safety technology, and completion of the company's first system design and build in China. Earnings before interest, tax, depreciation and amortisation climbed 25 percent to $6.4 million, with operating margins widening to 9.5 percent from 9 percent a year earlier.
"Scott Technology continues to see strong demand for our automation and robotics technology and capability," chair Stuart McLauchlan and managing director Chris Hopkins said. "A strong order intake over recent months has pushed forward work for large projects to a record high and we anticipate operating at near full capacity providing the confidence to continue to expand our capabilities in certain areas."
The company reported an operating cash outflow of $2.6 million in the half, compared to an inflow of $10.2 million a year earlier, which it said was due to "increased inventory and billings driven by growth". Inventories were at $19.2 million as at Feb. 28, up from $10.7 million a year earlier, while trade debtors totalled $20.1 million compared to $13.5 million a year earlier.
In February, Scott Technology agreed to buy European industrial automation specialist Alvey Group for 12.1 million euros to accelerate its growth plans and broaden the Kiwi manufacturer's access to global markets.
Scott Technology today said due diligence is completed and the sale and purchase agreement is being finalised with settlement expected this month. The company predicted the deal would immediately boost earnings.
"With a full order book providing momentum into the second half of the 2018 year, and the contribution expected from the acquisition of Alvey, the directors are confident that building on strong foundations will deliver growth in line with our strategic intent," McLauchlan and Hopkins said. "The directors and management are confident that adding acquisition growth to organic growth will provide strong value propositions for all stakeholders."
The board declared an unchanged interim dividend of 4 cents per share, payable on April 24 with an April 17 record date. The shares rose 3.3 percent to $3.46, having fallen 5.9 percent so far this year.