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Skellerup reports another record profit, boosts dividend

BUSINESSDESK: Skellerup Holdings, New Zealand's largest industrial rubber products supplier, reported another record annual profit and increased its dividend as new products and low debt levels shielded it from an economic downturn in some markets.

The net profit rose 22% to $24.7 million in the year ended June 30 from $20.2 million a year earlier, which was also a record. Profit was at the top end of guidance of between $22 million and $24 million provided in February.

The profit included a $400,000 insurance benefit. Earnings before interest and tax rose 13.6% to $36.59 million.

The profit and a policy of paying between 40% and 60% of earnings to shareholders led the company to approve a 5 cents-a-share final dividend, up from 4 cents a share last year. The dividend is payable on October 25.

Total dividends for the year of 8 cents a share are up from 6 cents last year.

"Skellerup is in the best shape it has been in for many years," chairman Sir Selwyn Cushing says.

The maker of consumables for the dairy industry was experiencing increased interest from markets in China and South America.

Total revenue rose 7.1% to $207.3 million.

A new version of the company's Flexiflo product used by miners had been well received by the market but sales of Deks branded roofing flashings in the Australian market had been less buoyant.

The profit of the industrial division rose 14.1%, while that of the agri-division was up 11.1%.

Sir Selwyn says the company is continuing to invest in organic growth opportunities and the benefits of this will be seen in the next two years.

The company is relocating a dairy manufacturing plant in Woolston, Christchurch, and is using the move as an opportunity to invest in plant and equipment. The plant is moving to a new site in the Christchurch region.

The shares last traded at $1.50 and have gained 13% this year.