Timing issues and a lower-than-expected profit from a newly
acquired division saw Hellaby Holdings shares sold off
brutally after the NZX announcement yesterday.
The shares closed on Friday at $2.92 and opened yesterday at
$2.84 before falling slumping further.
A late recovery meant the shares last traded at $2.90.
However, Hellaby chief executive officer John Williamson
still had good news for the market, forecasting group
operating earnings of about $54 million for the year ended
June, 43% higher than last year.
Craigs Investment Partners broker Chris Timms said that was
down from the $60 million earlier forecast, causing investors
to sell off some of their holdings.
Mr Williamson also forecast the reported profit after tax to
be about $25 million, 35% higher than last year.
The full-year forecast reflected improved year-on-year profit
performances by four of its five divisions.
The exception was footwear.
''The forecasted group outcome is a creditable performance.
Most of our subsidiaries have improved year-on-year.''
Three recent acquisitions - Federal Batteries and Dasko, in
the auto parts sector, and NZ Trucks, in the heavy equipment
sector - were integrating well and performing as expected, he
''Our balance sheet remains very strong and we are continuing
to pursue further growth opportunities that meet our
investment criteria and will add value to our shareholders.''
Unfortunately, several secured projects in Australia and the
Middle East had recently been deferred and would now start in
the new financial year, Mr Williamson said.
While the scheduling gaps had been backfilled with other work
at lower margins, Contract Resources had invested to support
the anticipated increase in work and the impact of the
Combined with the lower margin projects, there would be a
lower-than-expected profit for the subsidiary of about $15
million for the year.
Hellaby remained confident Contract Resources would deliver
an operating profit above $20 million next year, he said.
The variation in profitability was mainly a project timing
issue and was a characteristic of contracting companies.
Since the acquisition, Hellaby had invested in additional
management resources and worked hard to improve the company's
The footwear division, which included Hannahs and Number One
Shoes, had improved in recent months but trading conditions
remained tough and the division had forecast a full-year
operating profit of about $6 million, below last year's $9.1
million, Mr Williamson said.
Mr Timms said Hellaby still had a ''good story to tell'',
just not as good as it was previously.
With the exception of footwear, the other divisions were