Skellerup cuts profit forecast on US, Europe; stock tumbles

Thursday 9th April 2009

Skellerup Industries, a manufacturer of rubber goods and milking equipment, cut its full-year profit forecast because of a downturn in the U.S. and Europe. Its shares dropped 11%.

Net income in the year ending June 30 will be between $8 million and $9 million, down from the guidance in February of $11 million, the company said in a statement.

"Markets for the company's industrial division products in Europe and the U.S. in particular have now deteriorated to a significantly greater degree than was anticipated," the company said.

Chairman Selwyn Cushing said Skellerup's Agri division is continuing to trade in line with expectations. The board "remains confident that the primary focus for future growth should continue to be in the manufacturer, marketing and distribution of technical polymer products into global markets for both the Industrial and Agri divisions," he said.

Shares of Skellerup fell 7 cents to 58 cents. The shares sank as low as 51 cents on March 10 and are up almost 20% in the past month.

First-half earnings rose 6.6% on increased demand from
from dairy farmers. When announcing its first-half results earlier this month, the company said the Agri unit's revenue growth would slow with contraction in the dairy industry as prices fall. The industrial unit would be affected "by the marked slowdown being experienced in our key U.S. and European markets." Full-year profit last year was $12.6 million before one-time gains.

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