Rate shrinks golden egg's size

Exchange rate chickens have come home to roost for automated production line manufacturer Scott Technology.

The Dunedin company's annual result to the end of August fulfils the prophecy it made a year ago of tougher international trading conditions cutting into what was then a record- breaking performance.

The latest annual result shows a fall in sales of 24.8 per cent and a drop in net profit of 34 per cent.

The company lays the blame for both on the high level the New Zealand dollar reached against the United States dollar.

The Kiwi peaked at almost US71c in February, its highest level for seven years.

Scott posted a net profit of $3.72 million, down from the previous year's $5.63 million, achieved on turnover of $35.9 million, a fall from $47.75 million.

Chief executive Kevin Kilpatrick said the lower result was a reflection of the exchange rate and had been predicted. But it was still an excellent result.

"If you want to compare with the previous year it has reduced," he said. "But last year was exceptional and we had a full head of steam."

The lower result was still the company's second highest.

Shareholders' equity increased in the year from $16.9 million to $17.2 million and operating cashflow was a record $6.1 million, up from the previous year's cash outflow of $400,000.

At August 31 the company had no long-term debt and $1.9 million in hand.

Directors declared a final dividend of 7c per share, bringing the total for the year to 13c a share, fully imputed.

Kilpatrick said the company's order books for its high technology production lines were at a very healthy level, with forward sales of more than $20 million.

- NZPA