Skellerup HY17 Results

16 February 2017 Skellerup reaffirms FY17 Guidance and maintains interim dividend Key points for the six months ending 31 December 2016 - Revenue of $97 million down 10% (in constant currency terms down 2%) and EBIT down 3% on prior corresponding period (pcp). Stronger NZD key driver of revenue reduction with earnings impact partially negated by underlying business improvements and hedging gains. - NPAT of $8.9 million down 7% on pcp. Finance costs $430k up as expected on increased debt associated with the recently completed integrated Dairy Rubberware facility at Wigram. - Interim Dividend maintained at 3.5 cents (fully imputed) per share. - FY17 NPAT guidance unchanged and expected to be in a range of $20 to $22 million. - New Wigram facility operating well and in line with expectations. Solid underlying performance for most businesses and lower indirect costs helped negate much of the impact of the stronger NZD on Skellerup earnings for the six months to 31 December 2016. Lower sales into the Australian mining industry and the expected increase in finance costs were the primary cause of the reduction in NPAT. Agri Division revenue was down 11% but EBIT was up 1% on pcp. CEO David Mair said that the reduction in revenue was due to lower dairy rubberware sales into the European market and NZD strength against all currencies. "The European market remains soft with lower demand exacerbated by the weaker GBP & Euro. However, our overall earnings held to prior year levels due to a strong contribution from the US market, solid demand in NZ and Australia and FX hedging gains. We are cautiously optimistic that the recent improvement in the international milk price will continue to underpin solid demand in the second half of the year for our products, many of which are essential consumables, important for milk quality and animal health." Mr Mair also noted that Skellerup's new integrated Dairy Rubberware Development and Manufacturing facility at Wigram was performing well, with all Agri activities now on site. Industrial Division revenue was down 9% and EBIT down 6% on pcp. Mr Mair said the reduction in revenue was primarily due to lower sales into the Australian mining sector and NZD strength against all currencies. "We have continued to improve our Industrial businesses, however lower sales into the West Australian mining sector more than offset the gains made in the first half of the year. We expect an improved contribution from the Industrial Division in the second half." Chair Liz Coutts said Skellerup's results and financial position represented a solid performance and robust position and noted the Board and management are focussed on earnings growth. "With the new Wigram facility complete, our focus is firmly on products and systems for food safety, potable and waste water applications. These continue to provide a resilient business platform for Skellerup. We are working hard to further translate this into stronger earnings growth." Skellerup's Balance Sheet remains strong. With construction of the new Wigram facility complete, net debt was $35.6 million at 31 December 2016, representing just 23% of equity. The Board resolved to maintain the interim dividend, declaring a 3.5 cps pay-out, fully imputed. This will be paid out on 23 March 2017 to shareholders on the register at 5.00pm on 10 March 2017. Mrs Coutts reaffirmed Skellerup expected FY17 net profit after tax to be in the range of $20 to $22 million. 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 / John Redwood Senescall Akers Limited 021 481 234 / 021 581 234 End CA:00296847 For:SKL Type:HALFYR Time:2017-02-16 08:51:56