Skellerup reboots into firefighting
Skellerup, famous for making Red Band gumboots, is doing red-hot business selling to firefighters in Europe.
The NZX-listed company announced a record half-year profit on Thursday with revenue of just over $120 million for the six months to December 31.
And it noted that while sales of its Red Band gumboots for the domestic market remained ‘‘solid’’, growth was coming from its international footwear sales ‘‘boosted by firefighting boots’’.
Skellerup’s success in selling fireresistant boots to UK and European firemen symbolises the business model behind the company’s resurgence, chief executive David Mair believes.
Skellerup, said Mair, used to be seen as a ‘‘no-growth share that paid healthy dividends’’, with returns that bounced around depending on the oil price.
These days the business was a growth company, paying healthy dividends and specialising in the niche manufacturer of high-value plastics and rubber components for giant, sophisticated international manufacturers such as bathroomware companies Moen and Kohler.
And though Kiwis know it for the Red Band boots, 80 per cent of its revenues now come from exports, and internationally, nobody is interested in gumboots.
‘‘We sell gumboots to farmers in New Zealand because farmers in New Zealand walk around their farms,’’ Mair said. ‘‘That isn’t what happens in Europe and the US, where cows are locked up.’’
Instead, what the US, Europe, Asia, and South America need from Skellerup are high-end boots for firefighters to protect them from burns, for forestry workers to protect them from chainsaw kickbacks, and people working with highvoltage electricity. Skellerup’s business model was based around developing and supplying components for uses where standards were high, and rising, such as dairy, and potable water. The company had developed an ability to innovate rapidly, Mair said, which helped manufacturers get products to market faster, and they were willing to pay good money for that help.
The company is split into two divisions – industrial and agriculture – but the same business model operated across both.
Earnings were now less volatile, but there had been a close focus on reducing cost, Mair said.
‘‘We have had a key focus on improving productivity and efficiency in our operations.
‘‘At a micro level this includes monitoring key statistics in real time that has enabled us to address issues more quickly, reducing costly rejects. At a broader level, continually reviewing processes to identify opportunities to eliminate waste and introduce mechanisation has improved the efficiency of our activities.
‘‘These gains along with increased sales of specialist footwear into international markets have offset the impact of lower international dairy prices.’’