Strong demand from the industrial sectors has helped the rubber goods manufacturer Skellerup deliver a record half-year profit.
Skellerup is known for its red band gumboots. Photo: RNZ / Robin Martin
The company makes hoses, nozzles and gumboots for the rural sector, and parts for boats, cars and kitchen appliances. It is perhaps best known for its red band gumboots.
Key numbers:
- Net profit after tax - $23.2m vs $19.5m
- Revenue - $150.5m vs $136.6m
- Net debt - $25.6m vs $13m
- Cash flow - $19.5m vs $35.1m
- Final dividend - 7.5 cps vs 6.5 cps
- Full year profit forecast - between $44m and $47m.
(For the six months to December 2021 against 2020)
Skellerup chief executive David Mair said he was proud of the company's growth.
"Our consistently strong earnings performance is the culmination of years of hard thinking about the essence of our business and making deliberate choices to lay a foundation for future success."
This included designing and developing products that met the needs of its customers which are original equipment manufacturers.
Skellerup's bottom line for the period of $23.2m was slightly above Forsyth Barr's profit expectations of $23m.
The strong result was led higher by growth in its industrial division, where underlying earnings were up nearly a fifth on a year ago to $18.7m.
"Growth was broad based, and strongest in US, NZ and Asian markets, notwithstanding the impact of longer shipping timeframes, material shortages, freight and material costs increases."
Mair said the company had successfully managed the challenges while maintaining its margins and controlling indirect costs.
Underlying earnings of the company's agriculture business rose 9 percent to $16.7m.
Dairy rubberware sales were up, particularly in the US market but margins were slightly down due to the impact of higher raw material prices and freight costs, Mair said.
Skellerup's operating cash flow was down nearly 44 percent on a year ago to $15.4m.
Mair said this was because the company had increased how much inventory it was holding to ensure there was a continuity of supply to its customers amid Covid-19 disruptions.
Net debt increased following the acquisition of plastics manufacturer Talbot Advanced Technologies in August but remained just 8 percent of the company's total assets.
Mair said the record half-year result meant the company was in line for a record full-year result. It was forecasting a bottom line of between $44m and $47m - the mid point of which was 13 percent higher than last year's full year profit nof $40.2m.
"We have strengthened our team with new appointments in sales, product development and operational roles," Mair said, "These investments in capability and capacity will support sustained future growth."
