Hellaby Holdings has released a substantial earnings downgrade, warning the financial results for the six months to December are likely to be well below those for the previous corresponding period.
However, the second half of the financial year was likely to bring improvement, new managing director Alan Clarke said yesterday.
While the overall New Zealand economy was growing, the farming and agriculture market was depressed to flat and Australian economic conditions and confidence remained depressed.
The United States had also been variable, especially in the oil and gas segment, and major Middle East economies and refineries had been affected by the variability in oil and gas pricing.
''This volatility is expected to continue for the remainder of this financial year.''
Trading earnings before interest, tax, depreciation and amortisation (ebitda) were expected to be between $16.45million and $20.5million for the six months ended December compared with $28.7million for the pcp, Mr Clarke said.
Trading ebitda for the full year was expected to be ''broadly in line'' with the 2015 full-year result of $59.1million.
At a sector level, earnings growth in the automotive division would mean an improved result for the first half of the year.
The oil and gas services division, which had strong trading earnings through several large contracts in the first half of the previous financial year, would be well down in the current period.
That followed delayed starts to several large contracts which were now scheduled for the second half of the financial year.
As a consequence, the division's sales for the first half would be well down, he said.
A reduced level of sales in the first half for the equipment division was a result of a marked slowing in overall capital equipment spend, along with a drop in business confidence in New Zealand's agriculture and farming sector.
There had been a steady fall in trading in the footwear division, which included Number 1 Shoes.
Mr Clark said at a group level, performance in the second half of the financial year was expected to show significant growth over the corresponding period last year.
The oil and gas services group was expected to benefit from the delayed first-half contracts and planned refinery shutdowns.
The equipment group would realise earnings benefits from several new business initiatives in the construction sector, together with the ongoing benefit from the automotive division, with a full period contribution from the Australian-based JAS Oceania investment.
''My first month in Hellaby has confirmed my view the company has a strong and attractive future as a focused business owner of scalable innovative technology service businesses to industrial and commercial clients,'' Mr Clarke said.
Results of the first half were expected to be released to the NZX on February 18.
