KEY POINTS:
Skellerup Holdings said its December half year net profit rose 6 per cent to $6.1 million.
The company reconfirmed it was on track for a full year net profit of $12.5m compared with $637,000 last year after one off writedowns of $17.9m. Revenue rose 10.3 per cent to $103.3m, mainly reflecting a full six months' contribution from Italian company Tumedei SpA and strong construction in New Zealand.
Ebitda rose 16.3 per cent to $16.4m.
Chairman Sir Selwyn Cushing said dividend payments, suspended last year, would be resumed in October.
The rate will be in line with the policy to pay out 40-60 per cent of net profit.
He said trading performance in the first half of this year had been in line with expectations.
"Our industrial division performed satisfactorily given the slowdown in the US economy, and buoyant conditions in the international dairy sector drove an improved performance for our agri division."
Operating cash flow improved to $9m compared from $6.3m, reflecting the improved profitability assisted by cost savings.
The company was in the midst of change that would see it focus on global technical polymers and buy assets in targeted business areas while selling non-strategic businesses.
It planned to outsource production and use cheap Asian manufacturing.
Polymer products now comprised 70 per cent of group revenue, with continuing growth expected.
Sir Selwyn noted that a one-for-four renounceable rights issue at 80 cents a share announced last week would reduce debt as part of the change programme.
Chief executive Donald Stewart said all business units in the agri division had met or exceeded earnings targets, with the dairy-related businesses performing particularly well.
Industrial businesses were affected by slowing demand in the US, but those more closely focused on the Australasian general industrial markets continued to perform well.
He said earnings had benefited from cost reductions, particularly in the New Zealand operations.
Overheads were held static despite the inclusion of Tumedei.
Trading conditions in New Zealand reflected a balance between slowing demand in the industrial sector and continued buoyancy in the dairy sector.
"Nevertheless, the group's New Zealand industrial businesses continue to maintain a strong order book which should underpin their performance for the full year.
"Continued growth is likely in the dairy sector, led by historically high returns to dairy farmers in New Zealand and the United States."
Markets in Australia are generally led by buoyant conditions in the mining and water reticulation sectors.
Conditions in US and European markets were generally as anticipated, with softness in the US housing sector affecting the market for housing-related products.
Skellerup shares last traded on 81 cents. They had fallen from $1.33 in March.
- NZPA
