Ann: HALFYR: SKL: Skellerup HY15 Results

• Release Date: 19/02/15 08:55
• Summary: HALFYR: SKL: Skellerup HY15 Results
• Price Sensitive: No
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					SKL
19/02/2015 08:55
HALFYR
PRICE SENSITIVE
REL: 0855 HRS Skellerup Holdings Limited

HALFYR: SKL: Skellerup HY15 Results

Skellerup makes solid start to 2015 financial year

Key points for the six months ending 31 December 2014:
- Solid first half result as Agri Division delivers strong contribution
- Interim dividend pay-out maintained at 3.5 cps
- Net Cash reserves at $7.8 million
- Full year NPAT expected to be in line with FY14 (excluding the gain
attributable to the Canterbury Earthquakes insurance claim)

Skellerup's solid first half result highlighted the benefits of its diverse
earnings base and its investment strategies to build capability particularly
in the US market.

Chief Executive Officer David Mair said: "The Group earnings were slightly
below our expectation. We were impacted by the large Australian mining
operators deferring (rather than cancelling) planned maintenance and
productivity related activities due to substantially lower iron ore prices.
As planned we have incurred additional cost building a stronger capability in
the US market and this is already beginning to deliver increased earnings."

As a result, net profit after tax (NPAT) for the first half of the 2015
financial year was $9.7 million, compared to $10.8 million for the pcp when
both the Agri and Industrial Divisions made strong starts to the year.
Revenue was $96.0 million compared to $97.3 million in the pcp.  Skellerup's
balance sheet continues to remain in good health with net cash held of $7.8
million.

Financial Summary

$000 Unaudited
Half year ended Half year ended Percentage
31 December 2014 31 December 2013 Change
Revenue 95,951 97,278 -1%
Earnings before interest and taxation 14,025 15,613 -10%
Net profit after taxation 9,725 10,816 -10%
Earnings per share 5.04 5.61 -10%
Dividend per share 3.50 3.50 0%
Cash (Net debt) 7,778 -3,412 >100%

Industrial Division

An uplift of sales across the Industrial Division was not enough to offset
lower sales into the Australian mining sector. Revenue of $58.1 million
compared to $59.6 million reported in the pcp. Earnings before interest and
taxation (EBIT) was $6.8 million, compared to $9.2 million reported in the
pcp.

First half sales and earnings were up for all products sold into the US
market. Sales of pump systems used for liquid waste and the oil and gas
sectors increased as did sales of rubber products used in civil, plumbing and
roofing applications.  Skellerup has continued to expand its presence and
added further sales and marketing resource in the first half to capitalise on
the relatively buoyant conditions present and the mid-term opportunity it
sees to grow share with its range of products in this market.  Skellerup
expects larger gains will accrue in future years as the benefits of the
investment in people and capability accrue.

The impact of the deferral of maintenance expenditure in the Australian
mining sector had a significant impact on the Division sales and EBIT, more
than offsetting growth across the other product groups.  Industry reports
indicate that the volume of iron ore mined in Australia continues to increase
year on year.  However, Skellerup is cautious on the timing of any recovery
as maintenance activities and contemplated expansion and productivity
projects cannot be predicted, and customers are more conscious of reducing
inventory levels.

Costs associated with the restructuring of activities associated with the
Division's foam product range also impacted the first half result.  Following
the acquisition of Thermoplastics Foam in May 2014, Skellerup has
restructured the aggregated NZ and Australian activities and invested in
establishing an enhanced sales, marketing and distribution presence in North
America and Europe. Skellerup sees significant opportunity for this product
range and expects that potential will begin to be reflected in earnings in
the second half of FY15.

Agri Division

Agri Division earnings increased due to growth in sales of dairy rubberware,
animal hygiene products and rubber footwear products into international
markets.  EBIT was $9.7 million, up from $8.9 million, on sales of $38.2
million, up from $37.6 million.  The sales and earnings growth realised in
Europe, the US and Australia helped more than counter the reduced
contribution from the NZ market.

Construction of Skellerup's world class dairy rubberware development and
manufacturing facility at Wigram Business Park in Christchurch commenced late
in 2014. Foundation work at the 18,900 square metre facility is progressing
well. Construction of the facility is expected to be completed in February
2016, with the fit out running in parallel allowing the relocation process to
commence immediately on completion.
Dividend

The Directors have maintained the interim dividend, at 3.5 cents per share,
fully imputed, which will be paid out on 26 March 2015 to shareholders on the
register at 5.00pm on 13 March 2015.

Outlook

Chairman Sir Selwyn Cushing said: "Skellerup is focussed on improving its
operations, capitalising on its broad product range and growth opportunities
in the US market in particular.  Skellerup expects this strategy to
significantly offset the timing effect on earnings of the current decline in
key commodity prices with the main variable the timing of expenditure by the
Australian mining operators.  Skellerup expects FY15 NPAT will be in line
with the FY14 result of $20.7 million (excluding the gain attributable to the
Canterbury Earthquakes insurance claim).

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

A copy of Skellerup's HY15 Interim Report which will be mailed to
shareholders is also attached.
End CA:00260834 For:SKL    Type:HALFYR     Time:2015-02-19 08:55:23