By Jenny Ruth
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Thursday 23rd April 2009 |
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Demand from the wide range of industries which use Skellerup Holdings’ technical polymer products remains very weak and isn’t expected to recover in the short term," says Forsyth Barr analyst John Cairns.
But the company’s dairy liner business is very defensive and will provide a base level of earnings, he says. In early April, the company downgraded its earnings guidance for the year ending June to between $8 million and $9 million from its previous $11million in February, citing worse than expected deteriorations in its US and European markets. That compares with last year’s $14.7 million net profit. Cairns made no change to his EBIT (earnings before interest and tax) forecast of $19.8 million for 2009 but the company’s warning led him to downgrade his 2010 forecast from $21.7 million to $17 million. He made no change to his expected $14.6 million EBIT from agricultural earnings but cut his expected industrial earnings from $12.1 million to $6 million. He says Skellerup’s debt levels appear to be on the high side at $74 million, likely to fall to $66 million by June 30. The company has a $90 million multi-currency banking facility maturing in July 2010 which it is currently re-negotiating.
BROKER CALL:
Forsyth Barr rates SKL as HOLD.
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