Ann: FLLYR: SKL: Annual Results 2012

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SKL
23/08/2012 08:34
FLLYR

REL: 0834 HRS Skellerup Holdings Limited

FLLYR: SKL: Annual Results 2012

23 August 2012

Skellerup delivers another record performance

Full year profit and dividend at all time high

Highlights for year ended 30 June 2012

Record net profit after tax (NPAT) of $24.7  million, up 22.1% on previous
record of $20.2 million posted a year earlier  - this brings the compound
annual growth rate of NPAT over the last three years to approximately 40%
Performance driven by organic growth and operational efficiencies with
particularly strong earnings growth from the Industrial Division
Business remains underpinned by good cash generation and low debt - net debt
was $4.3 million at balance date, down from $9.1 million a year earlier
putting it at its lowest level on record
Shareholders rewarded with a fully imputed second half dividend of 5cps (4cps
a year earlier) - making a total payout for the year of 8cps

Skellerup's record breaking earnings performance for the year ended 30 June
2012 demonstrates the capability of the group to deliver high quality
manufactured products to meet customer demand both here and internationally.

Chief executive officer David Mair said: "Skellerup has high quality assets
across both its divisions that have considerable potential. What we are
seeing with our latest result is the organic growth opportunities that can be
generated from this asset base by focusing on customers, our supply chain and
our production capability. Our ability to develop new products has won us new
customers across all business units and has been a major factor in helping
shelter us from the lingering economic downturn."

"Looking forward we will continue our strategy of investing in developing new
sales channels and opportunities - not only in existing markets, but also in
emerging new markets such as China and South America. With net debt now at an
historic low of $4.3 million, Skellerup has the balance sheet capacity to
continue investing in its operations and deliver on growth prospects."

Revenue for the period under review was up 7.1% to $207.3 million while NPAT
was up 22.1% at a record $24.7 million. Included in the reported NPAT was a
one-off insurance benefit of $0.4 million.  Even without this benefit the
result was still up 20.1% on the previous year and also up on guidance
provided in February of between $22 million to $23 million. Looking over a
three year period NPAT has grown at a compound annual growth rate of
approximately 40%. This strong earnings growth continues to flow through to
the group's balance sheet with a further reduction in group debt to $4.3
million which in turn led to an improvement in the percentage of debt to
debt-plus-equity from 7.6% to 3.4%. Net cash generated from operating
activities was $25.3 million.

Financial summary
 Year to 30 June 2012 Year to 30 June 2011 Percentage change
 $000 (audited) $000 (audited) (Unaudited)
Total Revenue 207,313 193,593 +7.1%
Earnings before interest and taxation 36,594 32,227 +13.6%
Net profit after tax 24,665 20,200 +22.1%
Dividend
Earnings per share
Net debt 8 cents
12.793 cents
4,253 6 cents
10.504 cents
9,080 +33.3%
+21.8%
-53.2%

Industrial Division - New Zealand's largest industrial rubber products
supplier with customers in more than 30 countries -  performed above
expectations with earnings before interest and tax up 14.1% at $22.9 million
on sales for the year of $133.1 million (up 6.9%). This performance reflected
continued ongoing growth in the sale of industrial vacuum pumps to trucking
companies that service the North American oil and natural gas exploration
markets. Demand for industrial vacuum pumps has been driven by an increase in
exploration activity which has been a function of the relatively high oil
price. A continued focus on production efficiencies in China (where the pumps
are manufactured), and the logistics of shipping to the US, has enabled a
more consistent supply of product which in turn has allowed better service to
existing customers as well as the winning of new business from our
competitors.

The new generation Flexiflo product has provided strong growth on the back of
the continuing demand for iron ore out of Western Australia. As a result of
working closely with mining engineers, the introduction of our latest product
(Flexiflo II) has addressed the challenge of moving especially wet and sticky
ore. Flexiflo II has been very well received in the market and is the basis
of further development for resolving issues relating to the movement of a
wider range of mined minerals.
Sales of the Deks branded roofing flashings and plumbing products into the
Australian market has been increasingly competitive given a less than buoyant
home building and improvements market. While good progress continues to be
made in the development of motor vehicle drive shaft couplings, as well as
other motor industry technical products such as gas conversion kits, the
slowdown in European economies, as they grapple with the ongoing fallout from
the financial crisis, has seen sales into these markets flatten off.

The Agri Division - which manufactures and distributes products for the
global dairy industry - recorded an 11.1% increase in earnings before
interest and tax of $19.0 million on revenue of $74.1 million (up 7.4%).
This result reflected ongoing demand for its consumable products from the
dairy industry. After a solid start for the year the second six months has
seen stronger competition in some segments of the international market place
as the dairy industry became more cautious with milk prices internationally
moving lower.

However, the Agri Division continues to benefit from the fact that a majority
of its products are essential consumables for the dairy industry and in
addition there is an increasing interest in its product range from developing
markets in China and South America.

Christchurch Update
The dairy manufacturing plant in Woolston, is a key part of the Agri
division. Due to earthquake related damage and liquefaction risk, we are
negotiating to relocate this business to a new site within the Christchurch
region. To facilitate the move, a new state of the art rubber mixing plant
has been purchased (post 2012 financial year end) and capital has also been
allocated for the manufacture of additional moulding machines to ensure that
the business operation can relocate without interrupting the supply of
finished products to customers. The introduction of the new rubber mixing
plant will not only facilitate the move but will produce a high quality
product more efficiently.

Dividend
Skellerup dividend policy is to return to shareholders each year a total
dividend payout of between 40% and 60% of NPAT. Accordingly, the directors
have resolved to pay a final dividend of 5.0cps with imputation credits
attached at 28%. Payment will be made on 25 October 2012 to shareholders on
the register at 5pm on 12 October 2012. Given the strong financial position
of the company, the Dividend Reinvestment Plan will not be operative for this
dividend payment.

Annual Meeting
Skellerup's Annual Shareholders' Meeting will be held at Eden Park, Auckland,
on Wednesday 31 October 2012, at 2.30pm.

Conclusion
Chairman Sir Selwyn Cushing said: "Skellerup is in the best shape it has been
for many years. The business has performed exceedingly well to the benefit of
all shareholders. This has been reflected not only in stronger earnings and a
higher dividend payout but also in share price appreciation. Whilst economic
conditions particularly in Europe remain difficult, Skellerup has proved that
earnings performance can still be achieved through leadership, product
innovation and an understanding of markets in which it operates. Given the
success in driving growth from existing operations, the focus in the year
ahead will be to invest in further organic growth opportunities, the benefits
of which are likely to be seen over the coming two years".

For further information please contact:

David Mair
Chief Executive Officer
Skellerup Holdings Limited
09 571 5899
021 708 021

Skellerup Holdings is a specialist manufacturer and distributor of technical
polymer products and vacuum pumps for a variety of specialist industrial and
agricultural applications.
Founded more than 100 years ago, today Skellerup is a global company
headquartered in New Zealand, with operations in Asia, Europe, North America
and Australasia.
End CA:00226327 For:SKL    Type:FLLYR      Time:2012-08-23 08:34:50