KEY POINTS:
A tax credit has turned an expected loss into a profit at rubber products maker Skellerup, despite higher than forecast restructuring costs.
Net profit for the year to June 30 was $637,000 - down from $13.4 million the previous year but well ahead of the predicted $7 million loss.
The result included a tax credit of $8.3 million related to restructuring work, which totalled $17.9 million before tax, against a forecast of $16 million.
In June, the NZX-listed company said it would sell some business units and restructure to focus on technical polymer products.
The company employs about 850 people worldwide. It has about 400 employees in New Zealand.
Restructuring would take about 100 jobs at its Christchurch plant, due for completion in 18 months.
Managing director Donald Stewart said the divestment was on target, and indicative bids had been received for all non-technical business units.
"These businesses represent 30 per cent of our revenue and around 30 per cent of our ebit," Stewart said.
The proceeds from any sales would be used to reduce borrowing and pay for acquisitions.
Revenue was up 21.6 per cent at $193.9 million.
This included a full year's contribution from the acquisition of Gulf Rubber in Sydney, which performed ahead of expectation, and organic growth of 5.7 per cent.
Stewart said Skellerup would acquire businesses complementary to its products and business.
The cost base would be improved by manufacturing where it was most cost-effective.
But New Zealand operations had a strong future.
"We're not contemplating any structural changes to our manufacturing other than what we've announced now," he said.
Italian technical rubber manufacturer Tumedei, bought for a net $13.6 million in May, had performed to expectations.
The strong New Zealand dollar hit net profit by $4.7 million.
The company transacted at US68c, compared to US50c the previous year.
Skellerup confirmed its forecast of a $12.5 million net profit for the current financial year, assuming no divestments.
Future exchange rate shifts would have a limited effect although a drop in the value of the Kiwi would help the local economy and make it harder for competitors who imported, Stewart said.
Profit for the year before abnormal items was in line with forecasts at $9.2 million, and revenue from overseas operations continued to rise to more than 62 per cent, compared to 58 per cent the previous year.
Skellerup's share price closed up 1c yesterday at 92c.
