Mercer targets overseas sales to boost revenue
Stainless steel company Mercer Group is forecasting $10 million of extra revenues in fiscal 2013 as it targets substantially stronger sales in Australia and exports to the United States.
The stainless steel fabricator is also "actively" on the acquisition hunt for New Zealand manufacturing businesses, says chief executive Rodger Shepherd.
He made the comment after talking to shareholders at Mercer's annual meeting yesterday about the strong performance of the Titan meat slicer manufacturing business.
The company paid about $1 million for a 75 per cent stake in Titan in July. In the last few months the manufacturing base of the slicer had been moved from Nelson to Mercer's Lunns Rd base in Christchurch.
Christchurch director Humphry Rolleston, who owns a 35 per cent chunk of Mercer, said the slicer could do well in the US market where consumers liked sliced pork.
Shepherd said the company hoped to grow annual revenues of $33m achieved in the year to June to the 2013 target of $43m. The company had secured a $5m order from Toronto-based Maple Leaf Foods to install four slicing lines.
He did not want to give a bottomline forecast but said the company, formerly known as Broadway Industries, was trading better than last year and expected earnings before interest, tax, depreciation and amortisation (ebitda) of at least $3m.
Mercer reported a $962,000 loss in 2012, much narrower than a loss of $9.35m reported in the June 2011 year.
It was meeting banking covenants, with about $5m of debt with BNZ. The debt level was reducing by about $50,000 a month, Shepherd said.
The company was putting more emphasis on research and development, with one "leak protection system" being made to test that vacuum-packed cheese was not in a damaged wrapping, which could cause it to go mouldy in transit.
Typically such cheese blocks weighed 20 kilograms. The testing protection systems could be sold for $100,000 when commercialised, probably later this year, he said. Mercer Interiors, focusing on providing basins into the kitchen interior markets, was experiencing a pick up of sales related to new housing in the Canterbury earthquake rebuild. Chairman Garry Diack said 2012 had been a transition year and the business was "on a journey of recovery".
Earlier this year Shepherd injected $1m of capital into Mercer, and as a result has about 18.78 million shares or an 8 per cent stake.
He also has options to purchase a further 26 million shares and is entitled to 1 per cent of the shares on issue of Mercer during the 2013, 2014 and 2015 financial years, at the time of the first, second and third anniversary of his appointment, according to the 2012 annual report.
Shepherd said in 2012 his remuneration package of more than $370,000 was made up of a $300,000 base package plus another component in shares.
The Hubbards, of Timaru, and associated interests, still collectively hold 13.2 per cent of the company.
However, the Hubbards' assets have been in statutory management under Grant Thornton.