Scott reports loss but position strong

Chris Hopkins
Chris Hopkins
Listed Dunedin manufacturer and exporter Scott Technology booked a loss of more than $800,000 for the year's trading to August, as the escalating global credit crunch sparked a downturn in United States appliance manufacturing, Scott's main customer base.

The loss could have been almost three-fold had it not been for the acquisition during the year of Auckland mining equipment niche-marketer Rocklabs, which contributed positively to the bottom-line.

Scott had a $3.09 million profit on $29.2 million revenue for the same period last year but this year's $818,000 loss, on revenue of $25 million, was affected by both the US manufacturing downturn and drought which affected the meat industry, in which Scott is developing robotic boning machines in conjunction with Silver Fern Farms, managing director Chris Hopkins said yesterday.

"The United States housing crisis, which sparked the global credit crunch, directly affected the company's key market, the home appliance manufacturers," Mr Hopkins said.

He described Scott as being in a "strong position" to achieve growth, highlighting that key to the company's future was continuing funding for its research and development programme.

Achievements during the year could assist Scott to position itself for a "much improved performance in the near future".

However, Mr Hopkins cautioned this was provided the global economic situation did not deteriorate further.

There would be no dividend this year, compared to 6c last year, as Scott required working capital to fund expected growth, which includes potential acquisition of further engineering-related companies, Mr Hopkins said.

Mr Hopkins said the Rocklabs acquisition was one of several significant achievements during the year, through "the addition of a very manageable $5 million debt on the balance sheet", which was the first long-term debt held by the company in at least 14 years.

In August, brokerage ABN Amro Craigs upgraded Scott's forecast profit from a $2 million loss to a $700,000 loss on the back of the Rocklab's acquisition, having estimated Rocklabs revenues would be between $15 million and $20 million, with earnings before interest and tax of about $2.5 million offsetting Scott's losses.

Mr Hopkins said yesterday Rocklabs' profit helped underpin Scott's second-half result, producing a $18,000 profit compared to the $836,000 loss for the first half.

Five months of Rocklabs' trading appeared on Scott's bottom line.

Overall operating cash flows were at $1.2 million, Scott had $1.2 million cash in hand and assets had risen by $8 million to $30.2 million.

Noting other achievements, Mr Hopkins said the company would move to its new $3 million 3.2ha plant in Kaikorai Valley later this month and associate company Robotic Technologies Ltd had taken its first commercial orders for robotic and X-ray machines.

The strength of the New Zealand dollar had also caused ongoing concerns for Scott, having reached its highest level in 25 years, and further falls would assist, he said.

 

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