Strong agri result boosts Skellerup profit

ERJ staff report (TP)

Auckland, New Zealand – Skellerup, the industrial rubber goods manufacturer, announced a FY 2014 net profit after tax (NPAT) of $41.1 million, up 116% from the $19.0 million reported a year earlier.

The result – for the year ended 30 June 2014 – was “positively impacted” by a $20.4 gain from settlement of the Canterbury earthquakes insurance claim and negatively by a large $1.6 million cost for settlement of an historical product claim.

Group revenue was up 4% on the previous year to $196.6 million. A “substantial strengthening” in the New Zealand dollar versus the Australian dollar in particular dampened underlying improvement as over a quarter of the group’s revenues are earned in Australia.

Skellerup said it had a record performance from its Agri Division and a solid performance from its Industrial Division

CEO David Mair said: “It was a solid year [and] significant progress was made across our businesses. We are very pleased with the performance of our Agri Division.

“We have benefited from a buoyant NZ dairy sector leading to increased sales of liners and tubing, increased sales from an expanded footwear range plus a contribution from the acquisition of two small businesses to augment our animal hygiene product offering.

“We are well placed to take advantage of an expected regulatory change in Europe, which will drive growth as larger, more efficient dairy units replace smaller operations.

“In China, opportunities will grow as they increasingly look to strengthen food safety standards. These trends will help offset the impact of any drop in farm returns in New Zealand, which if sustained will inevitably lower demand for dairy shed consumables.

“Good progress was made in our Industrial Division albeit with improvements in returns accruing at a pace slower than what we would like.”

The Agri Division, which manufactures and distributes products for the global dairy industry, reported a 10% increase in EBIT to $21.7 million on a revenue of $80.2 million, up 11% on the previous year.

Its Industrial Division reported an EBIT of $13.5 million on revenue of $116.2 million.

Project Viking also “gathers pace” as the company commences a $30 million build project of a Dairy Rubberware Development and Manufacturing facility in Christchurch, New Zealand.