Skellerup HY20 Result

Skellerup expects FY20 earnings to be consistent with FY19 Skellerup announced today a half year unaudited net profit after tax of $12.1 million for the six months ending 31 December 2019. Key points for the six months ending 31 December 2019 o Revenue of $122.9 million, up 2% on prior comparative period (pcp) o Earnings before interest and tax (EBIT) of $18.0 million, down 7% on pcp o Agri Division EBIT of $10.1 million, up 5% on pcp o Industrial Division EBIT of $9.9 million, down 15% on pcp o Corporate Costs of $2.0 million, up 7% on pcp o Net profit after tax (NPAT) of $12.1 million, down 10% on pcp o Record operating cash flow of $24.1 million, up 84% on pcp o Interim dividend in line with pcp at 5.5cps o Strong start to second half of FY20 raising year-to-date NPAT ahead of pcp. o FY20 NPAT forecast in line with pcp. A record result from the Agri Division partially offset a weaker Industrial Division with the latter impacted by trade tariffs and lower demand from the infrastructural and exploration sectors in the USA. Agri Division EBIT increased by 5 percent to $10.1 million. CEO David Mair said international market revenue growth and operational gains drove the improvement. "The US market has delivered revenue growth as farmers have benefited from improved returns. Operationally, our key Wigram facility has made further productivity gains. We have more to achieve to reduce waste and improve performance." Mair also noted that the recently acquired Silclear business will provide a boost to earnings in the second half of FY20. Industrial Division EBIT reduced by 15 percent to $9.9 million. Mair said a weaker contribution from its large USA market and European Automotive sector caused the reduction from the record result achieved in the pcp. "USA trade tariffs and a lower level of oil and gas exploration activity reduced earnings. We have also seen a slowdown in infrastructural markets and have been impacted by later than anticipated commencement on some exciting new projects in the USA." Mair also said it was pleasing that earnings increased due to growth from new products sold into roofing and marine foam applications and the addition of the Nexus business acquired in April 2019. Chair Liz Coutts said Skellerup continued to generate very strong cash flows and that the interim dividend would be 5.5 cents per share, imputed 50% the same as in the pcp. "We have confidence in our strategy of working closely with key customers to develop products that deliver value and sustainable earnings growth. We have a strong balance sheet and generate very good cash flows. We have not seen any immediate material impact of the new coronavirus on our business, but we expect a temporary impact on our supply chain. We are carefully monitoring and taking actions to ensure we are best placed to respond to challenges this may present. We have made a strong start to the second half of the year, raising year-to-date NPAT ahead of pcp. We expect full year FY20 NPAT to be consistent with the result achieved in the pcp." For further information please contact: David Mair Chief Executive Officer 021 708 021 Graham Leaming Chief Financial Officer 021 271 9206 End CA:00348318 For:SKL Type:HALFYR Time:2020-02-13 08:34:26