Currency-exposed Dunedin manufacturer Scott Technology has reported an $836,000 loss for the six months to February 28.
This compares with a $1.2 million profit for the same period a year earlier.
Group sales for the six-month period being reported were $8.3 million, $6 million down on the $14.3 million recorded for the corresponding period a year earlier.
Scott Technology chief executive Chris Hopkins said in an interview that while the year had been difficult, there was optimism about the future of its existing business and new opportunities both here and overseas.
"We're almost quietly confident,'' he said.
Possible acquisitions were being assessed and other opportunities existed among clients who had deferred capital investment.
Chairman Stuart McLauchlan said that, as foreshadowed at the company's annual meeting in December, the high value of the New Zealand dollar, high domestic interest rates and the global liquidity crisis were hurting the export-oriented company.
"The global economic situation has seen many prospective overseas purchasers deferring new capital projects and this has affected the level of sales for both the appliances and automotive divisions.''
But the levels of inquiry by and quotations provided to customers were at record levels.
"Some of these opportunities are in industries and countries that have not traditionally been our markets.
"This is very encouraging for medium to long-term forward work".
Mr Hopkins said a 50:50 joint venture arrangement has been reached in Europe with Luciano Schiava, who has worked in the plastic appliance thermo-forming industry and has connections within the European appliance industry.
The joint venture would be based in Ireland and known as Scott Euro.
It would operate similarly to agencies the company has in China and North America.
"He knows the industry. He has the contacts, knows the people and will give us contacts on the ground,'' Mr Hopkins said.
Having a presence in Europe was considered vital and had been well-received at recent trade shows.
Mr McLauchlan said the company was still searching for suitable acquisitions but "a number'' of potential possibilities were being considered and due diligence was being done on an automotive company.
"Pending the outcome of due diligence, the company anticipates that it will be in a position to finalise this within the next two months.''
Mr McLauchlan reiterated yesterday that acquisitions had to fit, add value, have acceptable risk and offer synergies.
Construction has started on building an engineering facility and head office in Dunedin, and this should be completed at the end of August.
Directors have decided not to pay an interim dividend but plan to reintroduce half-yearly dividends when the company returns to "targeted'' profit levels.
ABN Amro Craigs broker Peter McIntyre said the six-month loss was not a surprise for a business so exposed to an extended period of a high exchange rate.
"It is to be expected. It really is a stock at the whim of the currency''.
The exchange rate was also a factor in the drop in sales, he said.
