Hellaby Holdings first-half growth delivers promise

Hellaby Holdings delivered on its promise of first-half growth but managing director John Williamson was still cautious about trading conditions and the economic recovery.

Operating earnings in the six months ended December were up 74% to $23.8 million on the previous corresponding period (pcp).

Reported profit was up 60% to $9.9 million and earnings per share were up 23% to 10.1 cents.

Revenue was up 44% to $351.5 million, driven mainly by two acquisitions contributing in the period. Equipment division sales were up 38%.

The interim dividend of 5.5 cents per share was up 10% and is fully imputed.

''We're seeing growth in areas that are starting to pick up, such as equipment.

"However, other sectors remain quite patchy and the increased profitability in some of our operations is simply due to the ongoing commitment of our people to improve the performance of their respective businesses,'' Mr Williamson said.

Four of the group's five divisions achieved operating profits equal to or better than the corresponding period last year.

Only footwear performed below last year's level, driven mainly by what has been a sluggish retail environment.

The operating profit rise included a full six-month contribution from Contract Resources and a three-month contribution from Federal Batteries.

Collectively that resulted in a return on funds employed of 22.9%, coming in well ahead of the group target of 20%, he said. The return on invested capital was 14.7%, ahead of the weighted average cost of capital of 13.5%.

''These are both excellent results given that, calculated on a 12-month rolling basis, they included only nine months of earnings from Contract Resources and three months of earnings from Federal Batteries, but are measured against the full purchase price of those two acquisitions.''

Corporate overheads decreased by 3% on the pcp. Group funding costs were $1.8 million higher, reflecting the debt-funded acquisitions.

The second half was expected to provide solid performance by all of the divisions, oil and gas services, automotive, equipment, packaging and footwear.

The profitability of many subsidiaries was weighted to the second half and the group was on track to perform to market expectations for the full year to June.

''Our businesses will remain focused on operational improvement and organic growth,'' Mr Williamson said.

 

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