Coote Industrial profit soars, full yr on track

West Perth-based Coote Industrial Ltd has announced a net profit after tax of $7.3 million for the half year to December 2007 on sales of $143.8 million.

The NPAT result is a 132 per cent increase on the previous corresponding period. Earnings per share were 8.36 cents and the directors have declared an interim dividend of 3.5 cents per ordinary share on a payout ratio of 55 per cent.

Managing director Michael Coote said he was pleased with the company's first half result which had been delivered during a period of significant growth and expansion through acquisition.

"This performance, together with ongoing development of business synergies within the group has created a positive outlook for increased organic growth and capacity for further acquisition" Mr Coote said.

During the period Coote Industrial successfully concluded five acquisitions: South Spur Rail Group, Gemco Rail, FCD Container Logistics, Industrial Powertrain and Drivetrain.

Integration activities in the first half included: Exploiting synergies in business capabilities and market focus;Identifying cost efficiencies and savings through scale economies and supply chain improvements; Establishing a common management framework; and Migration of business information systems and network infrastructure.

Mr Coote said the company expected to realise a number of operating synergies and cost efficiencies from integration activities in the second half.

"We have really only just begun to realise the full benefit of cost savings and efficiencies arising from integration of historical and acquired businesses. Subsequently we expect net margins will improve in the second half as a result of increased sales from our new businesses and cost efficiencies as a result of integrating those businesses within the consolidated group."

Mr Coote said proceeds from improved earnings would be targeted toward reducing debt.

During the half, Coote Industrial continued its strategic focus to realign its service offering toward the marine, defence, rail, resources and power generation sectors.

Mr Coote said investment in infrastructure and people positioned the group for further growth.

To further streamline the business integration process, the company has appointed Don Patterson as chief executive officer.

Mr Patterson has been an executive manager of Coote Industrial for the past six years and has played a significant role in the company's growth and acquisition program.

Mr Coote said Mr Patterson would play a key role in the group's next phase of growth. "Don is responsible for the continued consolidation of our growing business and ongoing financial performance," said Mr Coote.

"His appointment allows me to focus on my operational responsibilities as managing director, and together with our other executive directors we will concentrate on extracting the greatest benefit from the favourable trading conditions.

Mr Coote said he was confident that Coote Industrial would meet its full year targets of $269.91million sales and $19.04 million NPAT.

"With favourable trading conditions and a solid platform for growth, we believe we are on track to meet our full year forecasts," said Mr Coote.

Coote shares closed 6 cents, or 4.11 per cent, lower to $1.40 each today.