Skellerup profit up 116% on back of dairy sector

David Mair
David Mair
Buoyancy in the dairy sector has underpinned a record performance from Skellerup's agri division.

The company has reported after-tax net profit of $41.1 million for the year to June, up 116% from the previous year.

The result was impacted by a $20.4 million gain from settlement of the Canterbury earthquakes insurance claim and also a $1.6 million cost for settlement of a historical product claim. Group revenue was up 4% on the previous year to $196.6 million.

The company had benefited from a ''buoyant'' New Zealand dairy sector leading to increased sales of liners and tubing and an expanded footwear range, and from the acquisition of two small businesses to augment the company's animal hygiene product offering, chief executive David Mair said.

The agri division, which manufactures and distributes products for the global dairy industry, reported a 10% increase in earnings before interest and tax to $21.7 million on revenue of $80.2 million, up 11% on the previous year.

The company was well placed to take advantage of an expected regulatory change in Europe, which would drive growth as larger, more efficient dairy units replaced smaller operations, Mr Mair said.

In China, opportunities would grow as the country strengthened food safety standards.

Those trends would help offset the impact of any drop in farm returns in New Zealand, which, if sustained, would lower demand for dairy shed consumables.

Construction was scheduled to start before Christmas on a $30 million dairy rubberware development and manufacturing facility in Wigram, Christchurch.

Craigs Investment Partners broker Peter McIntyre said the company was fundamentally in ''good shape''.

The balance sheet was strong, agri was still doing well but industrial was ''lagging somewhat''.

Forsyth Barr broker Andrew Rooney said the industrial division sales were flat and below Forsyth Barr's expectations, while the agri division came in higher than expected.

The industrial division reported ebit of $13.5 million on revenue of $116.2 million, which was in line with the previous year, Mr Mair said.

The United States market delivered steady growth across its industrial rubber and vacuum pumps business.

The Australian market was ''tough'' for much of the year, reflecting sluggish demand in construction and infrastructure in particular, but that market appeared to be picking up.

Directors maintained the 5c-per-share dividend payout, bringing the total dividend payout for the June year to 8.5c per share.

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