Skellerup reaches $32.3m settlement with insurers over Canterbury quake claims
Skellerup [NZX: SKL], the industrial rubber goods maker, has reached a $32.3 million settlement with insurers over claims from the Canterbury earthquakes in 2010 and 2011 which prompted the relocation of its Christchurch manufacturing facility.
The Auckland-based company will receive some $22.3 million this month on top of the $10 million it's already been paid to cover includes costs that have been incurred and future expenses to shift its agri business to the Wigram Business Park in Christchurch, it said in a statement. Most of the payment will be treated as a capital item. Skellerup had cash and equivalents of $8.9 million as at Dec. 31, and net debt of $3.4 million.
"The earthquakes caused damage and ongoing inefficiency to our agri and industrial foam businesses located in Christchurch," chief executive David Mair said. "We now have certainty of insurance proceeds and can focus energies and resources on progressing the relocation of these businesses for which planning is well advanced."
Last month Skellerup reported a 14 percent lift in first-half profit to $10.8 million as it reaped the benefits of restructuring measures put in place to cope with slowing demand for its industrial rubber products for sectors ranging from automotive through to distributer and end-user customers.
The company is picking greater earnings growth from its industrial business, which it anticipates will help deliver annual profit of between $22 million and $24 million.
The shares fell 1.6 percent to $1.80 yesterday, and have gained 4.1 percent this year. The stock is rated an average 'hold' based on three analyst recommendations with a median target price of $1.91.