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Skellmax shrugs off weak markets

Friday 20th June 2003

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It's unlikely many champagne corks were popped on May 29 when Skellmax Industries finally recovered to its issue price of $1.15, some 11 months after listing.

Even so, IPO investors at least have their money back on paper and the company should manage to keep its head above water from here.

Skellmax is unique on the NZX for offering both agribusiness exposure and the potential for growth through exports.

It does this by making rubber and foam products and pumps, mainly for the dairy industry. Sharebroker ABN Amro, which managed last year's float, reckons it has the potential "to expand its global dominance in the dairy rubberware industry and dominate the fragmented global market of vacuum pumps for industrial applications."

The company looks likely to meet or better its forecasts for June-year earnings before interest and tax of $20.8 million and a bottom line profit of $12.4 million, even though conditions last year, with slow markets in the US and Europe and the Australian drought, were tough.

It doesn't have to worry much about the New Zealand dollar's rise because the materials it imports provide a natural hedge for much of its business and financial hedging takes care of the rest.

It has an experienced board under chairman Keith Smith. Chief executive Donald Stewart has been with the group in one of its forms since 1979. His performance managing the "Good Skellerup" companies through the collapse of their corporate parent in 1999 was impressive.

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