Short-term pain for long-term gain at PDL

The reduced result for the year ended March compares with a $4.53 million profit last year and is in line with forecasts released earlier this year.

The final result compares to an interim profit of $3.19 million and a dividend of 10 cents per share. No final dividend has been recommended.

Sales fell to $350.6 million from $$356.4 million previously although operating cashflow doubled to $32.2 million.

CEO Mark Stewart says the lower profit reflects the company's restructuring.

"The exiting of non-core businesses has all been part of our strategy to focus on our core strengths in electrical and electronic products."

"While it is enabling us to put our efforts into the areas offering the greatest growth opportunities, the company's profit has been further affected by one-off abnormal costs associated with these repositioning activities."

In addition to the impact of the sale of the plastics and retail businesses, Mr Stewart says the year's result had been impacted by the slump in the building industry on both sides of the Tasman which lowered sales, margins and profitability both in New Zealand and Australia.

"The electronics business had been hurt by material shortages and price rises for basic components, mainly caused by the booming international mobile phone business.

"The company had also been hit hard by the New Zealand dollar's fall, as it was a net importer of US dollars and most of its exports were in Australian dollars and euros, where there had been little or no devaluation of the New Zealand currency."

PDL has been shifting away from its manufacturing focus to specialise in developing leading edge technology and says the interest from French company Schneider and Hong Kong-based Gold Peak in becoming shareholders endorses the new direction.

"While these moves have not resulted in short term profit gains, the company is more strategically focussed and, as a result, has attracted interest from major international shareholders.

"This interest is a strong endorsement of the benefits that this restructuring and repositioning is delivering increased shareholder value."

PDL shares have risen from under $4.00 earlier this year to currently trade around $10.00.

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