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Mercer 2013 earnings at the top of forecast range, expects profit will rise further in 2014

Thursday 29th August 2013

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Mercer Group, the stainless steel fabricator, posted annual earnings at the top of its forecast range on strong demand for its products, and said profit would rise further in the coming year.

Earnings before interest, tax, depreciation and amortisation more than doubled to $2.5 million in the 12 months to June 30, from $1.1 million the year earlier and compared with its June forecast of $2.2 million to $2.5 million, the Auckland-based company said in a statement. Revenue rose 16 percent to $38.8 million.

Mercer is focusing on improving its operating performance following a restructuring and repositioning of the company in 2012. In the past year, Mercer has invested about $2 million in Titan Slice, which makes equipment to slice meats and cheese, and about $700,000 in its S-Clave technology and is on the hunt for appropriate acquisitions in the coming year.

"This coming year, Mercer is anticipating improved earnings over 2013 and a reduced level of capital and IP expenditure," the company said. "New equity is likely to be introduced from the warrants on issue. These factors should result in a strong cash inflow that Mercer can use to repay debt and continue to search for appropriate acquisitions."

Shares in Mercer were unchanged at 22 cents and have gained 10 percent this year.

In 2013, the company's stainless business increased revenue by 33 percent to $28 million while earnings before interest, tax, depreciation and amortisation doubled to $3.2 million as it filled orders for Fonterra Cooperative Group, Open Country and Canada's Maple Leaf Foods. The current order book is strong with good workloads through until February, the company said.

Meanwhile, the company's interiors business, which supplies sinks, basins, tubs, toilets, laminate and similar products to joiners, merchants, fabricators and other manufacturers, posted earnings of $279,000 from $15,000 a year earlier.

Mercer's medical unit, which supplies equipment for sterilization, washing and disinfection, posted a 5 percent drop in earnings to $168,000. The unit was breakeven in the first half and improved in the second half when it introduced MMM sterilizers into the local market, the company said.

Mercer said it is close to signing a licensing agreement for its S-Clave technology with a large multinational company for the North American market after a due diligence process was recently signed off by the prospective licensee.

In the latest year, Mercer posted a bottom line profit of $631,000 from a loss of $1 million the year earlier. No dividend will be paid, in line with the year earlier, the company said.

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