KEY POINTS:
Production line maker Scott Technology today reported a healthy $3 million turnaround in its interim result despite grappling with a high and volatile currency.
It reported a February half year net profit of $1.2 million compared with a loss of $933,000 a year ago.
The pre-tax operating surplus was $1.87m against a $1.4m loss last year.
Operating revenue rose to $14.48m from $12.27m.
Chairman Graeme Marsh said the return to profitability together with a strong, debt-free balance sheet allowed the company to restore an interim dividend payment. Three cents per share will be paid on May 3.
Sales of appliance systems had been a significant contributor to the company's profitability improvement, Mr Marsh said.
However, he noted much of the work undertaken over the last 12 months was on contracts secured when the New Zealand dollar was at more favourable exchange rates than the current US71c.
"The current high level of the New Zealand dollar, and in particular the volatility of the dollar, is providing a challenge to management who are addressing it through greater manufacturing efficiencies and the ongoing development of new technology."
Managing director Chris Hopkins said it was frustrating for exporters.
"It's the volatility on top of the high rate. Only a few weeks ago it was down around US67c and then this week it climbed up through US72. It certainly creates some challenges."
Scott tries to offset the high currency by buying inputs at the higher exchange range.
Mr Hopkins said despite this, Scott's order book was "comfortable".
Meat processing work undertaken through a joint venture with slaughterhouse PPCS had continued through the period and had seen the successful trialling of an automated primal cutting system at a meat processing plant in Australia.
Scott and PPCS in conjunction with the Foundation for Research and Technology on Tuesday will announce what they believe will be a significant leap forward in automated boning room technology.
During the period completed, Scott established a subsidiary to focus on providing equipment upgrades to existing customers, and service and support to both existing and new customers.
This company, although based in New Zealand, will primarily focus on its international customer base.
As part of its attempt to improving manufacturing efficiency and effectiveness, the company is relocating a senior executive in China. The staffer will be located in Shanghai.
Mr Marsh said research and development spending continued to be expensed as incurred and Scott's capabilities and experience in this field continued to expand.
Management expected to have a number of automated systems available for commercialisation within the next 12 months.
Scott shares rose 11 cents to $2.11 in afternoon trading today. They are down from $2.45 a year ago.
- NZPA
