Hellaby returns to profit in 2015 as acquisitions add earnings; plans to sell footwear units

Thursday 27th August 2015

Hellaby Holdings, the NZX listed diversified investment company, returned to profit in 2015 as it benefited from a series of acquisitions a year earlier, and has decided to put its footwear units up for sale after writing down their value in 2014.

The Auckland based company posted a profit of $23.4 million, or 28.6 cents per share, in the 12 months ended June 30, from a loss of $129,000, or 1.2 cents, a year earlier, it said in a statement. The year-earlier result included a $26.9 million writedown on the value of its Hannahs and Number One Shoes businesses, and stripping out that charge, earnings were up 6 percent, bolstered by full-year contributions from Australian battery distributor Federal Batteries, New Zealand auto components distributor Dasko and truck servicing firm New Zealand Trucks.

"Growth-wise, we have focused on the continued expansion of our core divisions, and this is paying off," chairman Steve Smith said. "Our newer businesses and market ventures, while still relatively small, are creating real growth prospects within the group, and performing well."

Hellaby sold its Elldex Packaging units in May this year for $33.1 million and contributed $477,000 to annual profit, which managing director John Williamson said at the time balanced out earlier acquisitions.

The company has decided its footwear division is no longer a core part of its investment portfolio, and Williamson said the company will look "to divest our two footwear businesses at an appropriate time."

The Hannahs and Number One Shoes brands have struggled in recent years as traditional apparel retailers try to fend off online rivals with lower overheads, and the unit posted a 6.5 percent decline in annual earnings before interest, tax, depreciation and amortisation of $5.8 million, on a 3.4 percent dip in sales to $140.8 million.

Hellaby is still on the hunt for new investments, and its balance sheet is strong enough for "one or two significant businesses, or a number of smaller bolt-on acquisitions to enhance our existing businesses," Williamson said. The firm had cash and equivalents of $9.5 million as at June 30, and net debt of $63 million.

The company said it expects to lift earnings in the 2016 financial year.

The board declared a final dividend of 12.5 cents per share, payable on Oct. 2, with a Sept. 25 record date. That takes the annual return to 21.5 cents.

The shares increased 0.7 percent to $2.84, and have dropped 10 percent this year.

Hellaby's oil & gas service unit lifted ebitda 13 percent to $18.5 million on a 15 percent gain in sales, while its automotive division boosted earnings 6.2 percent to $25.6 million on an 8.1 percent rise in revenue to $200.2 million. The company's equipment division increased sales 6.9 percent to $208.7 million, for a 16 percent gain in ebitda to $14 million.

The packaging division posted a 44 percent decline in earnings to $2 million on a 2.7 percent dip in sales to $43.6 million, before Hellaby divested the unit in May.

Smith said the company is well advanced in its search to replace departing CEO Williamson, and expects to make an announcement before Hellaby's annual meeting on Oct. 1.

BusinessDesk.co.nz

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