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Skellerup flags smaller profit in 2013, shares fall 3.5 percent

Wednesday 31st October 2012

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Skellerup Holdings, which makes industrial rubber goods, expects next year's profit to fall as much as 11 percent from a record result in 2012 as the company enters a tough trading environment. The shares fell to a three-week low.

Net profit will be between $22 million and $24 million in the year ending June 30, 2013, down from the $24.7 million it made this year, according chief executive David Mair's presentation to the annual meeting in Auckland. The shares fell 4.1 percent to $1.66 and have gained 25 percent this year.

Skellerup's agri business faced a rebound in the US once the North American drought subsides, though the company pointed to a slowdown in China and zero capital spending in Europe. A deteriorating Australian housing market and ongoing woes in Europe meant its industrial business faced slow trading conditions, it said.

"We have had a very good run in recent years which is encouraging. It looks like we are facing a challenging year ahead," chairman Selwyn Cushing said in speech notes published on the stock exchange. "What is essential to understand is that the restructuring of Skellerup is about building a strong platform to take this business into the future and make it as good as it can be."

The company is investing in what it calls organic growth opportunities as it seeks to become a "focused international manufacturer and supplier of high quality products," Cushing said.

Skellerup is relocating a dairy manufacturing plant in Woolston in Christchurch and is using the move as an opportunity to invest in plant and equipment. The plant is moving to a new site in the Christchurch region.

The stock is rated an average 'buy' based on three analyst recommendations compiled by Reuters, with a median target price of $1.83.

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