Scott profits jump 33.1 per cent
Industrial machinery and equipment maker Scott Technologies has posted a 33.1 per cent jump in half-year net profits, with the decision to diversify its revenue streams paying off amid volatile global economic conditions.
The Dunedin-based company said net profit for the six months to February 29 was $2.1m, up from $1.6 in the same period last year. That was off a 35 per cent increase in revenue to $29.4m, although sales and financing costs were $9.1m higher at $29.2m.
Scott shares rose 4.9 per cent to $1.70 on the news, and have gained about a quarter over the past 12 months.
The company said mining equipment and consumables revenues continued to be driven by robust commodity demand. That was matched by solid demand for its appliance production lines in both China and Australia, although the company acknowledged the traditionally strong North America market was variable, while demand from Europe was "almost non-existent''.
Additionally, Scott said its HTS-110 subsidiary, which designs and builds high temperature superconductors and electromagnets, produced a small positive contribution to total earnings once research and development costs are stripped out.
Going forward, the company said it is planning on shifting resources to producing standard products across its business units and away from large capital intensive projects where demand is expected to remain moribund.
"The company continues to see growth opportunities across a range of activities and will progress these where they add value to the business,'' said managing director Christopher Hopkins and chairman Stuart Mclauchlan in a statement.
During the period, the company also continued to strengthen its balance sheet, upping its cash position to $2.1m from $0.2m a year ago, while simultaneously paying off short term bank loans worth $1.1m and a longer dated loan of $3.5m.
However its cash flow position slipped, showing a negative net balance of $0.33 as of the record date, down from a positive $1.6m a year ago. This was primarily due to increased payments to suppliers and employees and the taxman.
A fully-imputed interim dividend of 2.5 cents per share was declared, payable April 24.