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26 Feb 2018 14:15
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  •   Home > News > Business

    Skellerup lifts first-half profit 31pc

    Skellerup Holdings has lifted first-half profit 31 per cent, thanks to a "stand-out" performance from its industrial unit.


    Skellerup Holdings has lifted first-half profit 31 per cent, thanks to a "stand out" performance from its industrial unit which boosted earnings 40 per cent.

    It's led it to forecast an increase in full-year profit.

    Profit rose to $11.7 million, or 6.06 cents per share, in the six months ended December 31, 2017, from $8.9m, or 4.63 cents, in the year earlier, the Auckland-based company said in a statement.

    Revenue rose 20 per cent to $116.7m. The company forecast full-year profit of between $24.5m to $26m, up from $22.1m last year.

    Skellerup's industrial unit has shown steady improvement over recent years after the company reduced its exposure to the oil and iron ore industries following a collapse in oil and iron ore commodity prices which dented demand for its products.

    That prompted the company to turn its attention to the less volatile potable water and wastewater industries, which it sees as having more stable and sustainable growth prospects. Meanwhile, earnings at its agri division rose a "solid" 13 per cent, it said.

    "The improvement in revenue and earnings can be attributed to the reshaping of our operations around the world; continuous and efficient product development and reducing exposure to industries affected by commodity cycles," chair Liz Coutts said in the half-year report.

    Earnings before interest and tax at Skellerup's industrial division increased to $10m from $7.2m as revenue rose 21 per cent to $73.7m.

    At the company's agri division, ebit rose to $9.5m from $8.4m as revenue lifted 18 per cent to $43.1m.

    Skellerup will pay an interim dividend of 4 cents a share on March 22, up from 3.5 cents in the year-earlier period.

    While the latest dividend payment will be fully imputed, future dividends are likely to carry only partial imputation of about 60 per cent as the company's earnings growth is largely coming from its international operations.

    Skellerup shares last traded at $1.80, and have gained 12 per cent over the past year.

    Two analysts have a "hold" recommendation on the stock and one has a 'strong sell', according to Reuters data.


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