Ann: FLLYR: SKL: Skellerup FY14 Result

• Release Date: 21/08/14 08:52
• Summary: FLLYR: SKL: Skellerup FY14 Result
• Price Sensitive: No
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					SKL
21/08/2014 08:52
FLLYR

REL: 0852 HRS Skellerup Holdings Limited

FLLYR: SKL: Skellerup FY14 Result

Strong Agri result boosts Skellerup profit

Key Points for the year ended 30 June 2014:

- Skellerup's earnings up on previous year
- Record performance from Agri division and solid performance from Industrial
division
- Annual dividend payout increases to 8.5cps
- Project Viking gathers pace as Skellerup commences approximately $30
million build project of a world-class Dairy Rubberware Development and
Manufacturing facility in Christchurch
Skellerup continued its strong focus on positioning its international
manufacturing and distribution operations for growth as it delivered another
solid earnings performance.

Reported net profit after tax (NPAT) was an exceptional $41.1 million, up
116% from the $19.0 million reported a year earlier. However the result 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 a more modest
4% on the previous year to $196.6 million. A substantial strengthening in the
New Zealand dollar vs the Australian dollar in particular dampened underlying
improvement as over a quarter of the Group's revenues are earned in
Australia.

Chief executive officer David Mair said:  "It was a solid year for the Group
and a year in which 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. Our reputation, range and global scale in
this sector means 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.  We have
focussed on investing in our team and product range, winning new business in
all markets.  In particular, we have continued to invest in the US market
with a number of new sales positions being created across our business. We
have and will continue to strengthen our product offering to this key market.
 We are confident by investing now, earnings growth will follow, also aided
by our competitive manufacturing bases in Vietnam and China."

Agri Division
The Agri Division which manufactures and distributes products for the global
dairy industry, reported a 10% increase in EBIT to $21.7 million on revenue
of $80.2 million, up 11% on the previous year. The result was underpinned by
a buoyant New Zealand dairy sector which lead to increased demand for dairy
liners and tubing. Footwear sales were also up with both the domestic and
international markets growing helped by a product range which now includes
specialist fire and forestry boots plus Bandals which were launched in the NZ
summer of 2013/2014. The division also expanded its animal hygiene business
with the purchase and integration of two small businesses to augment the
Ambic branded product range which is designed and manufactured in the UK.
Design work was completed for our world class Dairy Rubberware Development
and Manufacturing facility at Wigram Christchurch. Calder Stewart Industries
have been contracted to build this new approximately $30 million facility
with construction to commence before Christmas 2014 and the relocation into
the completed facility scheduled to commence 12 months later.

Industrial Division
The Industrial Division which manufactures products globally with customers
in more than 30 countries, reported EBIT of $13.5 million on revenue of
$116.2 million. This result was in line with the previous year despite
absorbing the impact of the settlement of a long running product claim with
Marley. The US market delivered steady growth across our industrial rubber
and vacuum pumps business as expected and we are well placed to continue to
capture both demand growth and market share. The Australian market was tough
for much of the year reflecting sluggish demand in the construction and
infrastructure industry in particular. This market, now appears to be slowly
picking up and we are well placed to capitalise on this with our competitive
and broadened product range. We have also expanded our presence in the foam
product area with the acquisition of an Australian competitor and the
appointment of a new General Manager to spearhead our growth plans in the
market.

Canterbury Earthquakes
As reported in March Skellerup settled its insurance claim resulting in a
gain of $20.4 million. The reported gain includes proceeds to fund the future
relocation of the Dairy Rubberware business to Wigram in Christchurch. The
costs of this relocation are not permitted to be recognised until incurred
meaning part of this gain will be eroded by costs in future years.

Dividend
Directors have resolved to maintain the 5 cents per share dividend pay-out,
reflecting the strong operating cash flows and confidence in the underlying
business. This brings the total dividend payout for the 30 June 2014
financial year to 8.5cps an increase of 6% over the prior year.

Concluding Comments
Chairman Sir Selwyn Cushing said: "The underlying performance of the group
was solid. Once more our Agri division posted a very pleasing performance
whilst the Industrial division continued to make positive steps forward.
Shareholders were rewarded with an increase in the annual dividend pay-out of
8.5 cps, up from 8 cps last year. I am pleased that we will soon commence
construction in Christchurch where we have committed more than $30 million to
developing a world class manufacturing facility at Wigram. This is a
significant step for our dairy business and great news for Christchurch.
Following the full settlement of the insurance claim in Christchurch we have
no debt and cash in the bank of $16.4 million as at 30 June 2014. Looking
forward we remain cautiously optimistic about the year ahead."

For further information please contact:
David Mair
Chief Executive
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:00254157 For:SKL    Type:FLLYR      Time:2014-08-21 08:52:46