Firm drops net profit estimate

SKELLERUP is optimistic of a sales revival in the United States after the company knocked $3 million off this year’s expected net profit.

Shareholders expressed their displeasure at the downgraded forecast, sending the share price down 10 per cent yesterday to close at $1.33.

The NZX-listed rubber and industrial products maker said net profit for the year to June 30 was now likely to weigh in at $17m, down from the $20m estimated in February – which itself was a downgrade from the previous prediction of between $22m and $24m.

Chief executive David Mair said dairy farmers in the United States were recovering from last year’s drought.

He said while the major economic indicators were positive, that growth was yet to be reflected in orders.

Sales of vacuum pumps to US oil and gas customers were up on the first-half of Skellerup’s financial year but still below expectations.

New Zealand’s drought meant farmers had deferred spending on dairy liners and tubing, and the company had lost sales in rubber footwear as farmers were less likely to change their gumboots in dry weather.

Skellerup was not losing market share and in some areas was gaining it, but markets as a whole were under pressure, Mr Mair said.

The company effectively had zero debt and strong cashflow, which put it in a good position to ride out weakness in its markets, he said.

Skellerup will report its year result on August 21.

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