Schaffer profit slides, outlook positive

Schaffer Corporation has reported a 57 per cent slide in first-half profit to $2.1 million, but chairman John Schaffer said the underlying strength of the company helped it maintain an interim dividend of 12 cents per share.

The diversified industrial company’s revenue fell 12 per cent to $75.7 million, but Mr Schaffer said the forecast increase in production would improve that situation in the near future.

“Our largest contributor to revenue and earnings, Automotive Leather, is on the cusp of a significant increase in volumes,” Mr Schaffer said.

“Over the next three years, we anticipate at least 50 per cent growth in volumes from new program awards by Mercedes Benz and expansion of existing customer programs.”

Mr Schaffer said the company was constructing a new finishing facility in Slovakia to support the increased production volumes.

“That facility is expected to be completed by the end of 2015. This is a pivotal investment in the future of Automotive Leather that will underpin increased revenues but also step change improvements in the division’s supply chain,” he said.

“Our order books in our building materials division are reasonably strong but we remain cautious about the outlook of the secotrs in which it operates.”

The company said it was expecting increased profits from its investment business, Gosh Capital.

Mr Schaffer said along with its other investments, the company expects the redevelopment to drive earnings and increase funds available for investment at Gosh Capital over time.

Schaffer shares were steady at $5.35 per share at the close of trade.