Oil and gas slowdown puts boot into profit

CLAIRE ROGERS
Last updated 07:46 22/02/2013

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Skellerup's run of record-breaking annual profits looks set to end this year after slower mining and oil and gas exploration pulled back first-half earnings.

The rubber products and industrial equipment maker cut its full- year net profit guidance to about $20 million, down from between $22m and $24m after first-half profit fell 17 per cent year on year to $9.5m.

Its NZX shares shed 11 cents yesterday to close on $1.53. Skellerup will pay an interim dividend of 3 cents a share.

The company has reported record- breaking profits for the previous two financial years, including $24.7m last year.

Sales in its industrial division - which supplies vacuum pumps and technical rubber products - fell 10 per cent to $59.4m, while earnings before interest and tax slipped almost 30 per cent to $7.8m.

Chief executive David Mair said sales weakened on reduced demand from oil and gas and mining customers because of higher gas and iron ore prices.

Its agricultural division had a smoother first half, with sales down 4 per cent to $35.5m. Ebit fell 8 per cent to $8.3m.

Sales had been affected by drought in the United States, which drove up prices of corn stock feed and constrained dairy farm expenditure.

Back home, a lower payout forecast from Fonterra had led farmers to defer replacing dairy liners and tubing. But demand for liners had increased after a subsequent forecast lift.

Skellerup was focused on growth opportunities for both of its divisions in China and South America, Mair said. Fairfax NZ

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