Revenue declined slightly from $211.4million a year ago to $210.3million, earnings before interest and tax (ebit) rose from $29.5million to $32.8million, while after-tax profit rose 8% to $22.1million.
Craigs Investment Partners broker Peter McIntyre said the bottom line was boosted by better control of costs in administration, supplier payments and distribution, collectively about $4.9million better off than a year ago.
The diversified rubber goods manufacturer’s chief executive David Mair said the industrial division’s ebit was up 12% to $17.1million and the agri-division’s up 6% to $19.8million.
The rising commodity prices boosted earnings in both New Zealand and in Skellerup’s major overseas markets, with Mr Mair saying current indications suggested that momentum was set to continue.
A final dividend of 6c took the full year to 9.5c, slightly up on last year. Skellerup shares rose 3.6% to $1.72 following the announcement, and were 25% higher than a year ago.
Mr McIntyre said while the $22.1million after-tax profit was an 8% gain on last year, Skellerup had benefited from a $2.5million foreign exchange gain, which if stripped out would have seen profit down 10%.
"With the improving dairy environment in New Zealand, we expect that the agri segment will begin to see improvement and sales momentum," Mr McIntyre said.
He highlighted that given Skellerup’s high exposure to dairy, agri being 60% of ebit and other commodities, the performance of key commodities remained a notable driver of earnings performance.
"More recently, Skellerup has been looking to diversify its earnings away from cyclical exposures, especially in the industrial segment, with a greater focus on the potable water market."
Forsyth Barr broker Damian Foster said the result was above expectations at the top end of guidance, driven predominantly by the agri division with revenue up 5% and ebit 9%, while the industrial division revenue was also marginally ahead, up 2%.
"The agri division was the standout in the result . . . a turnaround story in the second-half trading with higher commodity prices boosting discretionary farmer spend," he said.
Mr Mair said the industrial division had a particular focus on the potable water market and he was confident it was capable of further improvement in 2018 at the ebit line.
"Growing populations, changing weather patterns, ageing infrastructure and increasingly stringent environmental standards are creating further opportunities for us in New Zealand and abroad," Mr Mair said.
Within the industrial division, 38% of the $131.2million revenue was from water/waste, 23% from roofing, 11% each from appliances and automotive and the remainder from electrical, sports and leisure and exploration and mining. The agri division booked revenue of $79.12million, with 56% from overseas and 44% domestically.
