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Skellerup reports record net profit powered by industrial division

Friday 23rd August 2019

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Rubber goods maker Skellerup Holdings reported a record full-year net profit as its industrial division once again saw strong revenue growth.

The Auckland-based company said net profit for the year ended June 30 was $29.1 million, up 6.5 percent on the year. It had forecast full-year profit of $29 million-$31 million.

Revenue lifted 2.2 percent to $245.8 million and its earnings before interest and tax were up 5 percent to $41.8 million. More than 75 percent of the company’s revenue is generated offshore.

The industrial division saw its ebit lift 10 percent to $22.9 million and revenue lift 4 percent to $157.1 million.

The company, known for the gumboots, filters and milking equipment it supplies to the dairy sector, refocused its industrial unit in recent years after the collapse of commodity prices reduced demand from the energy and iron ore industries.

The industrial division makes components, seals and systems that range from water-level sensors in washing machines to automotive coupling, to orthotic ski-boot liners.  

Chief executive David Mair said the industrial division result was an outcome of concentrating resources and executing on the best opportunities.

“We are focused on providing innovative and cost-effective solutions for original equipment manufacturing customers. We have improved the speed at which we innovate,” he said.

Its agri division saw ebit of $22.8, in line with the prior year. Revenue was $88.8 million versus $89 million in the prior year.  New Zealand makes up 43 percent of its agri revenue, followed by North America at 27 percent.  

Mair said the result was in line with last year’s record as operating gains offset the impact of softer markets.

“Our team achieved a very good result in a year where market conditions were more challenging, particularly in North America and Australasia. By implementing operational improvements and continuing to deliver innovative and high performing products we were able to offset the market challenges,” he said.

The agri division manufactures and distributes dairy rubberware which includes milking liners, tubing, filters and feeding teats, together with other related agricultural products and dairy vacuum pumps.

Skellerup pointed to a mixed dairy market, with the US and Europe up, but Australia and New Zealand down. It saw growth internationally with its specialist boots, including new developments for electrical and firefighting equipment.

It will pay a final dividend of 7.5 cents on Oct. 17 to shareholders on the register on Oct. 4, bringing the full year to 13 cents versus 11 cents in the prior year. It did not provide an outlook for the current financial year. 

The stock last traded at $2.47 and has lifted 22 percent so far this year.


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