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Skellerup likely to move west in Christchurch

Thursday 23rd August 2012

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Skellerup Holdings is moving west in Christchurch but is not saying where yet.

The maker of rubber products for the dairy and mining industries says the relocation of its manufacturing facility from Woolston to somewhere else in earthquake-damaged Christchurch is a major issue for the company but it will be careful not to waste shareholders' money.

"It's a major project for us," chief executive David Mair told an analysts' briefing.

The current Woolston site, which was part-owned and part-leased, was not viable because of damage from earthquakes and liquefaction issues, he said.

The new site, likely to be on four hectares of land, would be purpose-built and a three-storey high rubber-mixing plant had already been purchased.

The company may have to buy land for the new site. Because of the uncertainty about the Christchurch site Skellerup was maintaining a strong balance sheet to provide for it.

Mr Mair would not speculate on the cost of the new Christchurch manufacturing facility beyond saying "it's a big number".

"We take the capital allocation question very seriously. We will not waste your money as shareholders," he said.

The company had received more money from insurers so far than it had spent and it had a major meeting with insurers later today.

The move could be done relatively quickly within a three month period and without disrupting supply to customers.

He declined to disclose potential sites, but said they were an open secret in Christchurch. It was a case of "go west young man".

Mr Mair said profit guidance would be provided at the company's annual meeting on October 31. He said trading of the New Zealand consumables business was lower in July.

June, which was normally a big month for sales to the dairy sector, had been quite slow and there may have been some destocking by customers.

Farmers were spending a lot more on environmental issues.

"Unfortunately we don't really benefit from that," he said.

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