Ann: HALFYR: SKL: Skellerup HY16 Results

• Release Date: 18/02/16 08:31
• Summary: HALFYR: SKL: Skellerup HY16 Results
• Price Sensitive: No
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					SKL
18/02/2016 08:30
HALFYR
PRICE SENSITIVE
REL: 0830 HRS Skellerup Holdings Limited

HALFYR: SKL: Skellerup HY16 Results

Skellerup delivers solid performance and benefits from key market focus.

Key points for the six months ending 31 December 2015
o Revenue of $107m up 9% and NPAT of $9.6 million at similar level to prior
corresponding period (pcp), with mixed performance within the group.
o Industrial Division revenue up 12% and EBIT up 11% on pcp. Growth in sales
in international markets boosted sales and earnings. Sales of recently
completed new product developments will see this increase continue in the
second half of the year.
o Agri Division revenue up 4% and EBIT down 13% on pcp.  Stronger sales in
overseas markets did not offset the subdued NZ demand for dairy rubberware
and footwear.
o Interim Dividend maintained at 3.5 cents (fully imputed ) per share
o Capital investment in the new integrated Dairy Rubberware facility at
Wigram is progressing in line with expectations. Fit out is scheduled to be
completed in May 2016. The transfer of manufacturing will occur in a staged
process over the ensuing 12 months.

Summary
A continuing focus on key overseas markets has delivered increased revenue
for Skellerup for the six months to 31 December 2015, although tough market
conditions for some traditional customers have resulted in a first half net
profit after tax of $9.6 million at a similar level to pcp. As planned
Skellerup has moved to a net debt position of $17.4 million with $19.1
million invested in the new Wigram facility over the past 6 months.

Financial Summary $000 (Unaudited)
Item; Half year ended 31 December 2015; Half year ended 31 December 2014;
Percentage Change
Revenue; 107,554; 98,712; 9%
Earnings before interest and taxation; 13,731; 14,025; -2%
Net profit after taxation; 9,641; 9,725; -1%
Earnings (cents per share); 5.00; 5.04; -1%
Dividend (cents per share); 3.50; 3.50; -
Cash (Net debt); -17,600; 7,778; >(100%)

Industrial Division
Chief Executive Officer David Mair said Skellerup's decision to invest in its
US operations had boosted revenue and earnings for the Industrial Division.
In particular, increased sales to OEM customers supplying US water supply
infrastructure and premium tapware had more than offset a slowdown in sales
to customers involved in oil and gas exploration, a result of the continuing
decline in global oil prices.

"It is satisfying to see the investment we have made in our US growth
strategy continuing to deliver tangible benefits to the bottom line," Mr Mair
said.

Sales of civil, plumbing and roofing products in Australia and Asia have also
increased, while sales into the West Australian mining sector were steady as
expected. The slump in oil prices and corresponding slowdown in activity in
the oil and gas exploration sector affected vacuum system sales.
The second half of the year will benefit from increased sales of a number of
new product developments now in production, including the first delivery of
Gulf Rubber couplings to a tier one European car manufacturer.

Agri Division
Mr Mair said that the reduced international milk price affected Skellerup's
Agri division.
"The drop in forecast pay-out for New Zealand dairy farmers has resulted in
some deferral of spending, which has slowed our local sales of dairy
rubberware and footwear. However, as previously noted many of our products
are essential consumables so we expect a recovery, but the exact timing is
difficult to forecast."

In contrast, Mr Mair noted that overseas sales in the first half of the year
were strong, enabling the Agri Division to record a slight increase in
revenue, however the higher costs of sales in delivering to international
markets caused a reduction in Agri Division EBIT compared to the previous
year.
Work at Skellerup's new integrated Dairy Rubberware Development and
Manufacturing facility at Wigram continues to progress well. The new on-site
Distribution Centre will soon be in use, while manufacturing operations will
transition following scheduled completion in May 2016. Capital investment in
the facility remains in line with expectations.

Dividend
Skellerup's Board has resolved to maintain the interim dividend, declaring a
3.5cps pay-out, fully imputed. This will be paid out on 23 March 2016 to
shareholders on the register at 5.00pm on 10 March 2016.

Outlook
Chairman Sir Selwyn Cushing said Skellerup's results represented a solid
performance in what remained a difficult market.

"The changes we have made to our Industrial Division over the past couple of
years are paying off. We have achieved good growth in the US helped by
investments being made to upgrade water infrastructure and also in Australia
through careful expansion of our product range into civil applications.
Further improvements are expected in the coming six months"
Sir Selwyn said the outlook for the Agri Division was harder to project, with
low global milk prices likely to have some impact on the timing and quantum
of farmer spend between May and July 2016, the off-season for most New
Zealand dairy farmers.

Overall, Skellerup projects a net profit after tax of approximately $23
million for FY16, a five percent increase on the $21.9 million recorded in
FY15.

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:00277828 For:SKL    Type:HALFYR     Time:2016-02-18 08:31:01