By Paul McBeth
Feb. 21 (BusinessDesk) - Shares in Skellerup Holdings sank 10 percent after the industrial rubber goods maker reported an 18 percent slump in first-half profit, missing expectations, and cut its annual earnings forecast.
Net profit dropped to $9.5 million, or 4.92 cents per share, in the six months ended Dec. 31 from $11.5 million, or 5.97 cents, a year earlier, the Auckland-based company said in a statement. Sales slid 7.7 percent to $94.9 million. That fell short of Forsyth Barr analyst John Cairns' forecast profit of $11.1 million on sales of $101.5 million.
The shares dropped 16 cents to $1.48. The stock is rated an average 'buy' based on three analyst recommendations compiled by Reuters, with a median target price of $1.85.
Skellerup's weaker performance was put down to weaker sales from its industrial unit, whose demand tapered off after an earlier flurry from North American oil and gas explorers. The company trimmed annual forecast net profit to $20 million from a range of between $22 million and $24 million, which was already down from last year's record $24.7 million.
"The 2013 financial year is shaping up to be a tougher year for the company than the previous one," chairman Selwyn Cushing said. "Our customers have been impacted by unpredictable weather patterns and a slowdown in activity, but as we have seen in the past, orders can quickly turn and we must be ready for this."
The board declared a fully-imputed dividend of 3 cents per share, payable on March 28, with a record date of March 15.
In October, Skellerup warned it was facing a tougher year in 2013 and was investing in organic growth opportunities, which included shifting a dairy manufacturing plant to a new Christchurch site.
Skellerup's agri division reported a 4.1 percent in sales to $35.5 million and a 7.8 percent fall in earnings before interest and tax to $8.3 million. The industrial unit showed the bigger decline, with a 9.9 percent fall in sales to $59.4 million and a 29 percent slide in ebit to $7.8 million.
Chief executive David Mair said the agri divison is slightly more predictable where decisions can't be put off, but industrial customers have greater discretion over their product demand.
The company is seeing good growth in developing Latin American markets for its industrial unit's goods, and is upbeat on the agri unit's fortune after Fonterra Cooperative Group lifted its forecast payout to farmers.