Skellerup jumps to record profit

Skellerup has reported a 69 per cent increase in annual profit. File photo

Skellerup Holdings reported a 69 per cent increase in annual profit to a record $20.2 million, on improved revenue and returns across its range of agricultural and industrial products, and said it sees further gains in the current year.

The company's shares jumped 4.1 per cent to $1.27 on the announcement, which was accompanied by the confirmation that David Mair, acting chief executive since April last year, will take the role permanently.

A presentation accompanying the NZX announcement signals the company is on the acquisition trail, saying opportunities will be "considered".

Net profit in the current financial year is expected to improve again, to between $22 million and $23 million, as the company continues to claw back from a serious deterioration in performance during the global financial crisis.

"This year's result is a particularly pleasing performance given the disruption the company has experienced in Canterbury," said chairman Selwyn Cushing in a statement to the NZX.

The increased returns came despite relatively small increases in revenue, up 7.1 per cent at $193.6 million. Sales of industrial vacuum pumps to the North American oil and gas industry, and investment by dairy farmers in capital equipment to maintain high quality standards helped sales of the agricultural division.

Industrial division sales of $125.5 million were up 7.6 per cent, with new products selling well in the U.S. and Australia, while European sales were healthy despite the difficult trading conditions in that market.

Earnings before interest and tax from the division, which represents almost two-thirds of revenue, came in at $20 million, up 45.6 per cent, while agricultural division sales of $69.0 million were 35.6 per cent and ebit from the division rose 11.9 per cent to $17.1 million, with margins comparable to last year but overheads reduced as a proportion of the increased revenue.

Also driving the result was a reduction in group debt from $26.9 million to $9.1 million, thanks to strong earnings growth. The Skellerup balance sheet is now lightly geared with a 7.6 per cent ratio of debt to debt-plus-equity.

A 4 cents per share final dividend has been declared, payable on Oct ober 21.