Signs of a slower ramp-up of Hellaby Holdings Australian packing operations has led broking firm Forsyth Barr to lower its sales and profit forecasts for the transtasman operator.
Broker Suzanne Kinnaird said yesterday the Hellaby December investor update confirmed trading conditions had been tougher than expected and the first-quarter profit of the 2012 financial year was on target and ahead of the previous corresponding period.
The first quarter was normally the smallest quarter, contributing less than 10% of the full-year reported profit.
"Subsequently, trading conditions over October and November across all business units have been slower than expected."
Forsyth Barr had downgraded its sales target for Hellaby 1.3% and its reported profit forecast 4.9% to $28.9 million.
Hellaby's valuation has been reduced from $3.20 a share to $3.16, but Forsyth Barr is retaining its buy recommendation. The shares last traded at $2.40.
After a three-year restructuring phase, Hellaby was now seeking to grow, both organically and through acquisitions, Ms Kinnaird said.
The company's balance sheet had a gearing ratio of 15.5%, and it was in a position to fund any growth initiatives.
"While trading conditions for the existing business units remain challenging in the short term, this is creating opportunities to secure value-accretive long-term acquisitions. We believe such acquisitions will act as a catalyst to close the value gap," she said.
