West Perth-based Schaffer Corporation Ltd has posted a half year net profit of $3.6 million, down from the previous corresponding period's $6.6 million, with its automotive leather business experiencing difficult trading conditions for the period.
West Perth-based Schaffer Corporation Ltd has posted a half year net profit of $3.6 million, down from the previous corresponding period's $6.6 million, with its automotive leather business experiencing difficult trading conditions for the period.
The first half NPAT is slightly above the forecast first half net profit of $3.5 million provided at its November 2005 AGM.
SFC said it would pay an interim ordinary dividend of $0.25 per share (fully franked) which would be paid in March.
SFC's Howe automotive leather division generated revenue of $46.4 million ($46.5 in previous corresponding period) and EBIT of $2.1 million ($5.2 in corresponding period).
SFC chairman John Schaffer said the difficult trading conditions contributed to the lower result.
"Howe was particularly affected by the well publicised difficulties at General Motors and Ford, which have impacted North American sales.
"However, volume increases in Europe and China have provided some offset. The local cutting facilities that Howe established in 2005 in Slovakia and China have positioned the division to pursue further growth opportunities in the medium term."
The company's Building Products division posted half results of $20.8 million in revenue, up 33 per cent from the previous corresponding period, and EBIT up 50 per cent to $3.6 million.
Mr Schaffer said the primary drivers of the Building Division's improved performance were increased activity in the commercial building market and supply to infrastructure projects.
In its Property Division, SFC had joint venture interests in six commercial and retail properties valued at approximately $28 million, with $14.4 million of associated debt.
SFC's investment property leasing operations contributed $0.9 million in EBIT and $0.5 million cash in the half-year.
SFC posted an EBIT of $100,000 from its 15 per cent stake in the Mindarie Keys residential subdivision, down from $1.2 million in the previous corresponding period, due to subdivision staging issues limiting the availability of stock for sale.
Over the next few years, the company envisages it will generate at least another $2 million of EBIT and $3 million in cash from the Mindarie Keys interest.
The sale of surplus West Perth land, generated EBIT of $900,000 for SFC, while the sale of its 51 per cent interest in Solco Industries generated EBIT of $300,000.
SFC believes the outlook for its Howe division will remain subdued, with the pressure on margins keeping full year earnings lower than the previous corresponding period.
However, the company believes full year sales and EBIT for the Buildings Products division will be above last year's results, even though the division's second half is typically seasonally slower than the first half.
Mr Schaffer said that SFC anticipates second half earnings to slightly exceed those of the previous corresponding period, partially offsetting the reduction in first half earnings.
"Due to the improvement in second half earnings, the board expects that full year earnings will be approximately materially below the $8.7 million reported for the 2005 financial year and SFC expects to declare a fully franked final dividend of $0.25," Mr Schaffer concluded.
At 1300 WST, the company's share price was up 23 cents to $5.33, a rise of 4.5 per cent.