Schaffer’s $11m year

The falling Australian dollar could play out nicely for industrial company Schaffer Corporation Ltd, which last week posted a 6 per cent increase in net profit to $11 million for the 2008 financial year.

The West Perth-based company said strong performances from its international automotive leather and its locally focused building materials divisions were the primary drivers of the net profit lift.

Revenue for the leather division increased by 42 per cent to $120 million, while earnings before interest and tax jumped 49 per cent to $8.9 million.

Schaffer has realigned the leather division's production facilities in recent years, with the establishment of labour-intensive leather-cutting plants in low-labour cost countries China, Mexico and Slovakia.

"As a result, despite difficult conditions across the global automotive industry, leather generated a second year of strong earnings growth," Schaffer said.

"The division achieved that growth despite the ongoing appreciation of the Australian dollar against the US dollar and the Euro during the 2008 financial year. ."

The main driver of increased sales was China, with total Asian sales up 228 per cent.

Meanwhile, Schaffer's building materials arm reported a 19 per cent increase in revenue to $65.6 million.

However, earnings before interest and tax dropped 19 per cent to $8.7 million, affected by integration costs and difficult trading conditions, including a weaker WA housing market.

Schaffer's property division reported a 75 per cent increase in EBIT of $6.6 million following the sale of assets in Perth and Melbourne, and a lift in net rental income from joint ventures across WA.

Overall, Schaffer achieved revenue of $196 million, up 33 per cent from the previous year while EBIT reached $22.1 million, up 15 per cent.