Scott's profits plunge 92pc

Scott Technology, which twice warned investors mid-year to brace for lower profits, has delivered a 92 per cent plunge in its full-year net profit.

The bottom-line profit of $315,000 in the 12 months to August compared with $3.72 million a year ago, the company said. In March, Scott reported an interim profit of $1.1 million, so it lost $785,000 in the second half.

The Dunedin-based automated production line manufacturer cancelled payment of its final dividend. Shareholders this year will pocket just 4c a share against 13c last year.

"Given the difficult trading conditions in the second half of the year, the interim dividend exceeds our surplus for the year and accordingly the directors have decided not to pay a final dividend," chairman Graeme Marsh said.

He said Scott had consistently paid a high proportion of its profit as cash, with $10.4 million of $12.5 million in profits in the past five years distributed.

The fall in profit is despite an 11 per cent lift in annual sales to $40.3 million - the second highest on record.

The company complained of difficult recent trading conditions, which were exacerbated by the high exchange rate and the high steel prices.

A buoyant domestic economy increased material, labour and local support costs.

This resulted in heavy cost overruns, Scott said, adding that shortage of skilled labour was another major difficulty.

Reduced margins, high level of work in progress, and the half-year dividend payment of $2.7 million meant the company experienced a net operating cash outflow of $1.6 million.

Scott is considering purchasing materials and components offshore to offset the effect of the high New Zealand dollar.

Marsh argued that as New Zealand's external deficit continued to deteriorate "we can, in due course, expect a realistic realignment in our currency".

- NZPA