Gumboots were the dress code for the launch of the Te Wai Koiora project at Te Aroha Marae in Kai Iwi north of Whanganui. Photo: RNZ / Robin Martin
Rubber goods manufacturer Skellerup's record underlying earnings for the first half have been eroded by higher interest and tax costs, leading to a fall in its bottom line.
The company is best known for its red band gumboots, but it also makes products for the rural sector, and parts for boats, cars and kitchen appliances.
Key numbers for the six months ended December compared with a year ago:
- Net profit after tax $23m vs $23.2m
- Revenue $165.5m vs $150.5m
- Underlying earnings $33.5m vs $32.4m
- Net debt $39m vs $25.6m
- Interim dividend 8 cents per share vs 7.5 cps
[Ll] Operating cash flow $20.2m vs $19.7m
Chief executive David Mair said it was a good result in a tough environment.
In the company's agri-division, underlying earnings fell 12 percent from last year's record on reduced dairy rubberware sales. It said a strong fourth quarter for 2022 meant a slower start to 2023 and lower production volumes and higher costs affected margins.
However, its industrial division saw a record first-half result.
"The rapid increase of inflation and general slowdown in demand is a different challenge to what we faced 12 months ago," Mair said.
"Our strategy of staying close to our customers, listening carefully to their needs, and developing products to meet them whilst continuing to standardise and improve process has been and will continue to be key to our success."
Mair said all of its divisions had to deal with increased costs, largely recovered through productivity gains or adjusting prices.
He said markets were mixed and seasonal demand affected the result.
"In Europe, our businesses have faced significant increases in energy costs and a slump in the purchasing power of the euro. However, the increase in energy costs has spurred demand for some of our products used in solar applications."
Mair said Skellerup's balance sheet remained strong despite the increased net debt due to working capital investment. He said net debt was at 19 percent of the company's net assets.
Skellerup reaffirmed expectations for another record year, with full-year net profit forecast to be in the range of $48 million to $52m.
Mair said markets would remain challenging, but earnings were expected to be stronger in the second half of the year when factoring in seasonal impacts.