Daily ShareChat: Hellaby Holdings

Investment company Hellaby Holdings' 7.6% decline in earnings before interest and tax (EBIT) to $6 million was well below his $9.1 million expectation, says John Cairns, an analyst at Forsyth Barr.

The company is dealing with a difficult operating environment in all four operating divisions, automotive, equipment, footwear and packaging, Cairns says.

While the automotive and packaging divisions were profitable, the other two made losses against Cairns' expectations they would make small profits.

The equipment division was impacted by a significant decline in demand for new materials handling and construction equipment and is being reconfigured to have a greater focus on after-market sales.

The footwear division suffered falling sales, discounting of surplus stock and restructuring costs within No 1 Shoes.

Cairns has cut his full-year EBIT forecast from $22.2 million to $20.3 million on the back of the first-half results.

"Trading conditions across all four operating divisions remain patchy," Cairns says. "However, Hellaby is well positioned to take advantage of any pick up in activity over the course of 2010. Restructuring initiatives have increased Hellaby's leverage to the recovery."

Hellaby's decision to pay a three cents a share first-half dividend after paying no dividends the previous year was "an encouraging move."

BROKER CALL:  Forsyth Barr rate Hellaby Holdings as accumulate.

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