Skellerup sees annual earnings lift of up to 21% in 2014 on gains in industrial rubber unit
Skellerup Holdings SKL, the industrial rubber goods manufacturer, expects annual profit to rise as much as 21 percent in the 2014 financial year with its industrial division tipped to make a bigger contribution.
The Auckland-based company forecasts net profit of between $21 million and $23 million in the 12 months ending June 30, 2014, and up from $19 million in the 2013 year, according to presentation slides accompanying chief executive David Mair's speech to shareholders at today's annual meeting published on the NZX.
That forecast is based on a bigger contribution from its industrial unit, which makes rubber products for sectors ranging from automotive through to distributer and end-user customers. The company cited opportunities for "substantial revenue growth" in food grade rubber and plastic products and in extraction and use of natural gas.
The industrial unit dragged on the 2013 earnings due to a slowdown in demand, and prompted Skellerup to refine and develop new products and relocate its manufacturing operations closer to its customers.
Skellerup plans to focus on building on its growing presence in the US for its industrial division, while leveraging its agri-business on a record payout by Fonterra Cooperative Group to its dairy farmer shareholders.
"We are confident that our industrial businesses are well-positioned to benefit from our enhanced position in the US, an improving US economy, on-going growth in global demand for food safety and gas and our actions to broaden our product offering in targeted areas," chairman Selwyn Cushing said. "Our outlook for the year ahead and beyond is positive."
The shares rose 0.6 percent to $1.64 in trading today, and have gained 2.5 percent this year, lagging the 16 percent gain on the NZX All Index, a capital index of all domestic stocks, over the same period.
Cushing said he was pleased to see the share price has largely recovered losses and was near similar levels a year ago.
"That to me indicates investors understand what we are trying to achieve in this business and are confident that the people charged with delivering on that performance will indeed succeed," he said.