Hellaby slashes bank debt, looks forward to profit

Hellaby Holdings says it has knocked its core bank debt back by more than a third to $51 million, from $80 million, in the past six months.

Some of the aggressive debt reduction came from profits in the second half but the majority was from improving working capital or inventory levels and better debt collection, said managing director John Williamson.

The owner of No 1 Shoe Warehouse, Hannahs and automotive and other industrial assets was collecting debt faster from customers, which meant customer debts were not being funded by bank debt, he said.

Driving down bank debt without selling many assets was a "very, very good achievement".

"It is very significant, particularly because 18 months ago our core bank debt was close to $120 million."

This year Hellaby predicted the group's ebitda was likely to be around $25 million and tax-paid profit $5 million for the year to the end of June 30. Williamson said that with no further announcements since then, the inference would be that Hellaby was still on target for a profit.

Full-year financial results will be reported on August 27.

"We are certainly not seeing the green shoots that are being talked about, but we have put a lot of work into improving the operating performance of our businesses in the last six months so we are in better shape than we were six to 12 months ago, irrespective of the economy," Williamson said.

Hellaby has also renegotiated its banking facilities with its principal bank, Westpac, for a two-year period to July 31, 2011.

- NZPA