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Tru-Test FY sales rise 12 percent, profit triples on UK sale

Tuesday 22nd October 2013

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Tru-Test Corp, which doubled in size after buying a dairy industry equipment business, posted a 12 percent increase in full-year sales and said profit almost tripled on a gain from the sale of a UK subsidiary.

Profit rose to $6.6 million in the 12 months ended March 31, from $2.3 million a year earlier, according to the Auckland-based company's annual report. Earnings included $5.6 million from the sale of its UK livestock weighing and tagging business Ritchey and Fearing. Sales rose 12 percent to $97.6 million.

The closely held company, which counts veteran rural business executive John Loughlin as chairman and former Warehouse Group boss Greg Muir as managing director, made what it calls a transformational acquisition by buying Dairy Technology Services in January for some $73 million.

The milk storage and refrigeration business extended Tru-Test's reach in the dairy industry after it acquired dairy automation and herd management company Radian Technology for $1 million last December.

Dairy Technology "delivers a significant change in scale that has been required for some time," Loughlin said in the report. "We continue to actively look for further acquisition opportunities."

The first quarter of 2014 has met company expectations with less impact from last summer's drought than expected. The impact of drought may yet be felt, Loughlin said. Increased dairy company milk payouts bode well for the dairy sector while some of Tru-Test's international markets are operating "in very difficult economic conditions."

Tru-Test sold UK subsidiary Ritchey and Fearing after holding the company for little more than two years because its plans to increase its global business in animal tags were thwarted when it failed to make further acquisitions in the sector, the company said. The sale price amounted to a return of more than 100 percent on the investment.

Total assets jumped to $138.7 million in the latest year, from $57.4 million in 2012, including $41.8 million on intangibles related to Dairy Technology. Tru-Test's products include livestock weighing, electronic identification and dairy automation, milk meters and electric fence systems. It is the world's leading manufacturer of livestock weigh-scale indicators and milk metering equipment, according to its website.

In the 2013 year, US sales climbed 22 percent, South American sales jumped more than 50 percent from a low year-earlier base while New Zealand "enjoyed another good year of trading", it said, without giving details. The Australian and European markets "both held their own in very difficult conditions."

The company won't pay a dividend as it focuses on repaying bank debt taken on to make acquisitions, it said.

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