Scott Technology's first-half profit jumps 33%

Friday 23rd March 2012

Scott Technology's first-half profit jumped 33 percent on strong demand for its mining equipment and consumables and despite a slump in its traditional markets.

Scott's net profit rose to $2.1 million in the six months ended Feb. 29 from $1.6 million in the year-earlier six months with sales rising 35 percent to $29.4 million.

“The group's diversification across a range of industries has enabled us to again deliver a strong result,” the company said in a statement.

“The global increase in demand and prices for commodities continues to drive strong sales for our mining equipment and consumables while we are also seeing strong demand for appliance production lines into both China and Australia and meat processing solutions into Australia,” the company said.

However inquiries for its appliance production lines from North America, historically a significant driver of Scott's business, are “variable” and demand from Europe “is almost non-existent.”

All areas of the business are fully engaged with forward work extending toward 2013 although new orders for large capital projects have dropped, reflecting uncertain markets globally, and have been replaced by an increase in smaller projects, upgrades and standard equipment, the company said.

“The introduction of several new products also boosts overall demand.”

Scott said it continues to invest in R&D for HTS-110, which designs and builds high temperature superconductors and electromagnets and which contributed a small operating profit.

Demand for its meat processing systems is showing “strong forward momentum” following recent successful installations in both Australia and New Zealand.

The company is actively looking at ways to expand skills and capacity, both through organic growth and acquisitions.

Its latest purchase last September was of a 75 percent stake in a Chinese manufacturing facility for $975,000. Scott says the facility's existing contract manufacturing should cover ongoing costs while providing it with a base to take advantage of opportunities within the Chinese and wider Asian markets.

Its head of appliance systems has transferred to China to oversee this process which will place Scott “geographically closer to our main appliance systems markets and will assist us to better service and develop these markets.”

Scott will pay a fully imputed 2.5 cents per share interim dividend to which the dividend reinvestment plan will apply, up from 2 cents last year.

Scott shares rose 1.9 percent to $1.65, down from their high at $1.76 earlier this month which was their highest level since early 2008, and well above their year low at $1.27 in August last year.

(BusinessDesk)

BusinessDesk.co.nz

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