Ann: FLLYR: SKL: Skellerup FY13 Result

• Release Date: 22/08/13 10:46
• Summary: FLLYR: SKL: Skellerup FY13 Result
• Price Sensitive: No
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SKL
22/08/2013 08:46
FLLYR

REL: 0846 HRS Skellerup Holdings Limited

FLLYR: SKL: Skellerup FY13 Result

Skellerup exceeds earnings forecasts and maintains dividend payout

Key Points for the year ended 30 June 2013

- Skellerup exceeds earnings guidance following a late across-the-board
pickup in activity
- Annual dividend payout maintained at 8cps based on a firming outlook for
the year ahead and underpinned by a strong balance sheet with net debt
standing at just $2.2 million at the end of the period
- New Christchurch site secured and work is underway to develop a highly
specialised rubber development centre and manufacturing operation
Skellerup capped off a very challenging financial year with a late surge in
activity that saw group earnings exceed revised expectations.

This culminated in the company reporting net profit after tax (NPAT) of $19
million for the year ended 30 June 2013. A prolonged drought in New Zealand
coupled with a drop off  in oil and gas exploration activity had seen the
company revise down its full year NPAT expectations to $17 million (from an
all time record $24.7 million in the 2012 financial year). But a strong
across-the-board pick up in May and June put a positive finish to a demanding
year.

Chief executive officer David Mair said: "The financial year under review
demonstrates how markets can be unpredictable and the impact that can have on
performance in any given year. We can't control, for example, when a drought
may happen and how long it will last or the ebbs and flows of the global
energy industry. But what we can control are the quality of our products, our
understanding of the needs of our customers and our management of inventory
with smart manufacturing processes."

"As a company we were well positioned to take advantage of the pickup in
activity that did occur in May and June. Our NZ Agri Division bounced back
post the drought with liner, tubing and footwear sales all strong. The
Industrial Division also rallied to perform better than expected with higher
sales of industrial rubber products and vacuum pumps into the United States
and Flexiflo chute linings into Australia."

"In spite of the late recovery NPAT was down on the previous record-breaking
year. Revenue for the period under review was $189.5 million, down from
$207.3 million the previous year with the key difference been a drop in
contribution from the Industrial Division. This was due to the Industrial
Division where lower exploration activity reduced our earnings from vacuum
pump sales in the United States and a softer Australian economy reduced
earnings from our Gulf Rubber business.  On the other side, in spite of the
severe drought in New Zealand, the earnings contribution from our Agri
Division was up slightly with sales growth in dairy liners and tubing.
Typically demand patterns tend to be more predictable in the Agri Division as
it involves food safety, meaning that purchasing decisions can't generally be
put off for too long."

Operating cash flows continued to be strong with net debt standing at $2.2
million at year end.

Financial Summary

NZ$Million  FY13  FY12 % Change

Revenue  189.5 207.3  -9%

EBIT  27.8  36.6  -24%

Earthquake Net Income  0.0  0.4

NPAT  19.0  24.7  -23%

EPS  9.9  12.8 -23%

DPS  8.0  8.0  0%

Operating Cash Flow  26.0  25.3  3%

Net Debt  2.2  4.3  49%

Industrial Division - New Zealand's largest rubber products supplier with
customers in more than 30 countries - experienced a difficult year due to
soft trading conditions in international markets which was reflected in EBIT
of $13.5 million, down from $22.5 million the previous year. Revenue was also
down at $116.9 million ($133.1 million in 2012). A pleasing aspect is that
the performance reflected a slowdown in demand rather than a loss of
business, which means that the company remains well positioned for any pickup
in activity - as was seen in May and June - as the economic conditions in its
core markets improve. During the quieter patches the opportunity was taken to
further refine products, develop new products or relocate operations closer
to customers.

Agri Division - which manufactures and distributes products for the global
dairy industry - proved its resilience in the wake of drought conditions in
New Zealand and the United States, producing a solid performance with EBIT of
$19.8 million, up slightly on the previous record breaking result a year
earlier. Revenue was $72.4 million, slightly down on last year.

Christchurch Update
A key focus for Skellerup during the year was to secure a new site for the
company's Christchurch operation which occurred in May 2013 after entering
into an agreement with Ngai Tahu Property Limited to purchase a 3.4 ha site
for $7.1 million in Wigram Business Park. The project for the relocation of
the New Zealand dairy business from the historic Woolston site is progressing
well. Construction will begin early next year on dedicated world class
manufacturing facility. The new premises will comprise the development and
innovation centre for food grade rubber products and a state of the art
manufacturing facility designed to optimise work processes and achieve
significant efficiencies in production.

Dividend
Directors have resolved to maintain the same 5.0cps second-half dividend
payout, reflecting the strong operating cash flows of the business and
confidence in the underlying business. This brings the total dividend payout
for the 30 June 2013 financial year to 8.0cps.

Concluding Comments
Chairman Sir Selwyn Cushing said: "The outlook for the year ahead and beyond
is positive. Our Agri business continues to provide us with steady underlying
earnings even during difficult times as just experienced. I am pleased with
the progress made to relocate our Christchurch operations to a new state of
the art purpose built facility. The Industrial business had a tough year
however we expect to see a stronger performance in the current financial
year. With net debt at historic lows and cash flow strong Skellerup remains
in excellent health."

For further information please contact:
David Mair
Chief Executive Officer
021 708 021

Graham Leaming
Chief Financial Officer
021 271 9206

For media queries please contact:
Geoff Senescall
Senescall Akers Limited
021 481 234
End CA:00240017 For:SKL    Type:FLLYR      Time:2013-08-22 08:46:44