KEY POINTS:
Hellaby Holdings yesterday issued its second profit warning for the year, blaming start-up costs associated with Australian expansion.
The company said its after-tax profit was likely to be about 30 per cent lower than last year - between $12 million and $13 million compared with $18 million.
In February the company warned profits would be down about 20 per cent because of poor retail sales during the first half.
Management had hoped that second-half results would still be in line with the year before.
But although its retailing businesses - Hannahs and Number 1 Shoes - had rebounded, one-off costs associated with its automotive and engineering businesses had offset that, said managing director David Houldsworth.
The second half was now expected to generate a profit of $8 million - down from $9 million last year.
"The retail business has recovered pretty much as we had hoped," Houldsworth said.
But the other businesses had been hit by a range of different one-off costs which collectively impacted on the result, he said.
The group's automotive businesses - TRS Tyre and Wheel and Diesel Distributors - had both been affected by higher start-up costs as they expanded into Australia.
Growing those businesses across the Tasman meant it would take longer to get them in to profit but was still a cheaper option than making new acquisitions in Australia, Houldsworth said.
"We think they are going to add value in the future."
The New Zealand operations of Diesel Distributors were trading ahead of expectations, he said.
AB Equipment - which rents industrial equipment such as forklifts - had received record forward orders but sales and profitability had been constrained by worldwide demand which was slowing delivery from international suppliers.
There were also costs related to the rise of the kiwi dollar affecting some businesses.
Houldsworth said he was not prepared to make projections for next year but he was confident most of the issues were one-offs.
Forsyth Barr analyst John Cairns said he was relatively unconcerned about the downgrade.
Hellaby shares dropped 7c yesterday to close at $3.98.
