Skellerup (SKL) Fundamentals

[winner69]

Last year FY23 profit $50.9m

They say Skellerup expects FY24 NPAT to be similar to prior year

But they did say a few months ago it would be between $50m and $55m

Hope market doesn’t see latest outlook as a profit downgrade

[Goob]

Wow, very impressed by Mair in this podcast interview. Interesting comments on succession. Thinks there's up to five youngsters 34-39 years old that are good enough to run the business today.

https://omny.fm/shows/shared-lunch/skellerup-s-david-mair-on-leading-and-legacy

[Ricky-bobby]

What a legend and so glad he is staying on the board. Would love to have a beer with him

[Muse]

Wow, very impressed by Mair in this podcast interview. Interesting comments on succession. Thinks there's up to five youngsters 34-39 years old that are good enough to run the business today.

https://omny.fm/shows/shared-lunch/skellerup-s-david-mair-on-leading-and-legacy

superb interview. fantastic company. and in the low $4 dollars / share, increasingly attractive value.

[Sideshow Bob]

In a downward trend - closed at $3.53 on Friday, but traded at a low of $3.35 - lowest level since end of 2020.

Full year NPAT forecast to be similar to last year (no further update since HY 15/2).

Dairy prices forecast to start the season stronger.

Change in the skipper, but past skipper still on the board.

[kiwikeith]

In a downward trend - closed at $3.53 on Friday, but traded at a low of $3.35 - lowest level since end of 2020.

Full year NPAT forecast to be similar to last year (no further update since HY 15/2).

Dairy prices forecast to start the season stronger.

Change in the skipper, but past skipper still on the board.

SKL is a quality company and I have been a very happy shareholder for a long time. The market capitalisation of $700m and a forecast net profit after tax of $50m puts SKL on a PE ratio of 14. That could be considered good value for a quality company but is not 'back up the truck' bargain basement levels.

[winner69]

BP posted this back in November last year about my chart that showed SKL PE had hit 30 (share price about $6.40) and was starting to how signs of falling

Updated chart below ....Share price today about $5 and PE 21 (on forecast earnings)

So profits increasing .... PE shrinking ..... not good for shareholders

If he PE today was by some chance the average pre-2020 of 15 the share price would be $3.60

From June 22 …might update chart

[Sideshow Bob]

SKL is a quality company and I have been a very happy shareholder for a long time. The market capitalisation of $700m and a forecast net profit after tax of $50m puts SKL on a PE ratio of 14. That could be considered good value for a quality company but is not 'back up the truck' bargain basement levels.

Not a shareholder but on the radar.

That is my feel - solid well-run company, reasonable PE, not much debt but not at a fill-your-boots level.

But what is one of those TA mantra's "don't buy in a downward trend'?? Down 28% YTD.

[Sideshow Bob]

From June 22 …might update chart

Yeah its come back down into that 'usual' range around 14.

[sb9]

Added a few today, the low NZD gotta benefit these guys over next few years. See how it goes.

[sb9]

Big buy up at close to finish the week on 4.55, interesting.

[sb9]

One of very few to finish in green today, up a Cent. Someone big is in accumulation mode and happy to pay up a bit.

Results on 15th, Wed week, may test 5 handle depending on results, divvy payout and outlook.

[nztx]

One of very few to finish in green today, up a Cent. Someone big is in accumulation mode and happy to pay up a bit.

Results on 15th, Wed week, may test 5 handle depending on results, divvy payout and outlook.


Cushing liked this one a while back .. Are his family interests still in here ?

[sb9]

Cushing liked this one a while back .. Are his family interests still in here ?

I believe so, don’t hv further insight on this. Someone more knowledgeable may be able to shed some light.

[percy]

Cushings are No.5 largest shareholders.

Total Number of Shares:196071582 Extensive Shareholding:Yes
Shareholders in Allocation:
Allocation 1:27179396 shares (13.86%)

FORSYTH BARR CUSTODIANS LIMITED
Forsyth Barr Limited, 35 The Octagon, Dunedin Central, Dunedin, 9016 , New Zealand
Allocation 2:14988664 shares (7.64%)

FNZ CUSTODIANS LIMITED
Fnz House, Level 3, 29a Brandon Street, Wellington, 6011 , New Zealand
Allocation 3:9705339 shares (4.95%)

CUSTODIAL SERVICES LIMITED
158 Cameron Road, Tauranga, 3110 , New Zealand
Allocation 4:8655737 shares (4.41%)

BNP PARIBAS NOMINEES (NZ) LIMITED
Bell Gully, Deloitte Centre, Level 5, 1 Queen Street, Auckland, 1010 , New Zealand
Allocation 5:8366169 shares (4.27%)

H & G LIMITED
Rural Equities Ltd, 127 Queen Street, Hastings, Hastings, 4122 , New Zealand
Allocation 6:7969512 shares (4.06%)

ACCIDENT COMPENSATION CORPORATION
110 Featherston Street, Wellington, Wellington, 6140 , New Zealand
Allocation 7:4547257 shares (2.32%)

New Zealand Depository Nominee Limited
Nzx Centre, 11 Cable Street, Wellington Central, Wellington, 6011 , New Zealand
Allocation 8:3647426 shares (1.86%)

HSBC NOMINEES (NEW ZEALAND) LIMITED
188 Quay Street, Auckland Central, Auckland, 1010 , New Zealand
Allocation 9:3600000 shares (1.84%)

David William MAIR
79 St Andrews Road, Epsom, Auckland, 1023 , New Zealand
Director: Yes
Allocation 10:3052304 shares (1.56%)

TEA CUSTODIANS (MTF) LIMITED
Trustees Executors Limited, Level 9, Spark Central, Boulcott Tower, 42-52 Willis Street, Wellington, 6011 , New Zealand
Historic data for shareholders

[Sideshow Bob]

https://www.nzx.com/announcements/436168

Skellerup overcame challenging markets to deliver record earnings before interest and tax (EBIT) of $72.7 million, a one per cent increase over the previous record result.

Highlights for the year ending 30 June 2024

- Revenue of $330.6 million, down 1% on the prior comparative period (pcp)
- EBIT of $72.7 million, a record result, up 1% on the pcp
o Industrial Division’s EBIT of $46.9 million, a record result, up 9% on the pcp
o Agri Division’s EBIT of $30.7 million, down 10% on the pcp
- Underlying net profit after tax (NPAT) of $50.0 million, down 2% on the pcp
- NPAT of $46.9 million, after deducting a non-recurring, non-cash tax charge required for the change in legislation in New Zealand to remove tax depreciation deductions on buildings- Operating cash flow of $70.8 million, a record result, up 31% on the pcp
- Net debt of $15.4 million, down 43% on the pcp
- Final dividend of 15.5 cents per share (cps) (50% imputed), bringing the total FY24 dividend to 24.0 cps (50% imputed) for the full year, up 9% on the pcp

CEO Graham Leaming said the Skellerup team had delivered robust results, amid challenging global economic conditions. “Operating earnings and cash flow were both record results, reflecting the strength and breadth of our business model, quality of customers and the focus and contribution of our global team. FY24 EBIT was $72.7 million, a one per cent improvement on last year’s record result and FY24 operating cash flow of $70.8 million was up 31 per cent on last year.”

Leaming added, “Revenue and earnings growth from new and existing products in industrial applications more than offset a lower result from products we sell into Agri applications. We maintained an unwavering focus on meeting customer needs, continuous improvement in our facilities and managing costs while investing in development and capability for new products and future growth.”

Higher interest rates and an increased tax rate caused Underlying NPAT to fall by two per cent from the prior year’s record to $50.0 million. Skellerup also recorded a non-recurring, non-cash tax charge required for the change in legislation in New Zealand to remove tax depreciation deductions on buildings. This one-off charge reduced NPAT to $46.9 million.

The Industrial Division’s EBIT was $46.9 million, a record result and up nine per cent on the pcp. Revenue was $226.2 million, up four per cent on the pcp. Increased sales into wastewater, hygiene, roofing and construction applications, particularly in the US market, were key drivers of the fourth consecutive record result in FY24.

Leaming noted, “Our Industrial Division generates more than 85 per cent of its revenue from international markets. A highlight in FY24 was one of our customers successfully launching a new hand sanitiser product. Our team delivered the pump assembly, integral to the operation of this product. It was exciting to see their work rewarded and generate significant sales for Skellerup. More broadly, our strategy of targeting a range of demanding applications continues to be proven with a robust year across the Division. In addition to growth in wastewater, roofing and construction applications, we enjoyed increased sales into potable water and appliance applications following customer destocking in the prior year. The exception in FY24 was our high-performance U-DEK® marine foam, where a global slowdown in demand exacerbated by our customers holding relatively high levels of inventory caused a sharp reduction in our sales in international markets. Pleasingly we saw an increase in the final quarter of FY24.”

Agri Division EBIT was $30.7 million, down 10 per cent on the pcp. Revenue was $105.3 million, also down 10 per cent on the pcp. Destocking by international dairy customers, the timing of demand in the New Zealand dairy market and lower footwear sales in the second half of the year impacted on the result.

Leaming explained, “Our Agri Division remains a world leader in the design and manufacture of essential consumables for the global dairy industry and the design and manufacture of rubber footwear for farming and speciality applications including electricity, fire and forestry. As the COVID- and supply-chain-related disruptions of the preceding two years abated, we were negatively impacted by international dairy customers reducing inventory levels and restructuring costs of $0.8 million in the first half of FY24. As anticipated, the second half saw an increase and return to normal ordering patterns from international customers. In New Zealand, sales in the fourth quarter of FY24 were lower than expected as farmers milked longer, delaying maintenance. Footwear sales into international markets grew, but sales in New Zealand in the second half were lower than expected, impacted by tougher economic and more benign weather conditions than experienced in the pcp. While the market situation created a tough year for Skellerup, we focused on and achieved productivity gains and tightly controlled costs to help reduce the impact of lower revenue on EBIT.”

We are well positioned and resourced for future growth. During FY24 we have made important investments in equipment, people and facilities.

To meet immediate and future customer requirements and production needs, we built a medical-grade cleanroom at our liquid silicone rubber manufacturing facility in the US, and we installed collaborative robots and new presses in the US, China and Europe. We have continued to invest in advanced equipment in New Zealand to improve productivity and refine the standardisation and therefore mobility of production capability. In October we will relocate one of our US distribution facilities to a larger, better located site to meet the growth we have achieved and expect to continue to achieve in this market.

We have strengthened our product development teams. In Christchurch, our team is critical to our global Agri business. We have been gradually building to enhance the inhouse capability to both design and fabricate products and tooling for original equipment manufacturers (OEMs) and branded markets as well as ensuring we can integrate new equipment and improved processes into our operations. In Auckland, our team has been central to the growth in the US market over the past decade. We have upgraded our facility and laboratory to support growth in engineered elastomer, plastics and liquid silicone applications.

Leaming commented, “The consistent thread across our Group is our unwavering focus to understand customer needs and use our deep expertise in material science and our capability to combine different materials, rapidly build and deliver prototypes, and to manufacture precision products in a scalable way. We also continue to invest in our systems to provide us with the information we need and ensure we are agile and make good, fast decisions to create new opportunities to grow Skellerup’s business.” 

Chair John Strowger noted the FY24 result was a very favourable outcome given the global economic environment and a testament to the contribution of the global team.

“We are not immune to the economic cycles, but our business model and results demonstrate we navigate them well. As previously noted, the intellectual capability of our people is as much an asset of the Group as the bricks and mortar which are reported on our balance sheet. We have lasting relationships, and this long-held trust helps create new prospects. Customers value the deep expertise we consistently deliver, providing a steady pipeline of opportunities for growth.”

Strowger also highlighted the robust financial position of the business. “Record operating cash flow means we have further reduced what was already a low level of debt. We continue to consider this a distinct advantage, ensuring we make the right decisions for the business in the medium term rather than compromising due to external constraints. It enables us to distribute a healthy proportion of our earnings to shareholders too. The Directors are very pleased to announce a final dividend of 15.5 cents per share, imputed to 50 per cent, which takes the full-year dividend to 24.0 cents per share, a nine per cent increase on the prior year. The final dividend will be paid on 18 October 2024 with a record date of 04 October 2024.”

[winner69]

Bob, that’s one hell of a result eh

You’d have to say SKL a great company these days

ROIC ~18% …… lots of value to funds employed eh

[Sideshow Bob]

Bob, that’s one hell of a result eh

You’d have to say SKL a great company these days

ROIC ~18% …… lots of value to funds employed eh

Yes Winner, a quality company.

Just ruing the missed opportunity to get in around $3.70-3.80 a few months back......;)

[sb9]

Yes Winner, a quality company.

Just ruing the missed opportunity to get in around $3.70-3.80 a few months back......;)

Yeah, great result under tough macro economic conditions.

Should see sp move closer to 5 bucks.