Hellaby Holdings (NZX:HBY) advises that trading for the financial year 2016 half year ending December 31 is expected to reflect the effect of variable economic and market conditions across all its major markets. Trading for the full FY16 year is expected to be in line with the previous FY15 year and the interim dividend is expected to be held at nine cents per share in line with the previous financial year’s interim dividend.
The board has also considered newly appointed MD Alan Clarke’s view of the strategic direction of Hellaby after his first month in the role and is providing an update accordingly.
FY16 half year result
A review of expected results for the six months to December 31 indicates earnings are likely to be well below those for the comparative period in the previous financial year. At the annual shareholder meeting in early October Hellaby told shareholders that group earnings will be heavily weighted in this financial year to the second half and the board continues to hold that view.
While the overall New Zealand economy is growing, the farming/agriculture market is depressed to flat and Australian economic conditions and confidence remain depressed. The USA has also been variable, especially in the oil and gas segment, and major Middle East economies and refineries have been affected by the variability in oil and gas pricing. This volatility is expected to continue for the remainder of this financial year.
Trading earnings before interest, tax, depreciation and amortisation are expected to be between $16.5 and $20.5 million for the six months ended December 31 verses $28.7 million for the same period in the previous financial year.
Trading ebitda for the full FY16 financial year is expected to be broadly in line with the FY15 full year result of $59.1 million.
The footwear division has seen a steady decrease in trading at Number 1 Shoes and as a consequence the FY16 first half is expected to be down on the previous year.
At a sector level, earnings growth in the automotive division will see an improved result for the first half of FY16 over the same period in the last financial year.
The oil and gas services division, which saw strong trading and earnings through several large contracts in the first half of the previous financial year, will be well down in the current FY16 first half, following delayed starts to several large contracts, which are now scheduled for the second half of the FY16 financial year. As a consequence, the division’s sales for the first half will be well down.
The equipment division has also seen a reduced level of sales in the first half of the current FY16 financial year against the same period last year as a result of a marked slowing in overall capital equipment spend along with a drop in business confidence in NZ’s agriculture and farming sector.
At a Hellaby Group level, performance in the second half of FY16 is expected to show significant growth over the FY15 corresponding period.
Hellaby’s strategic direction
“My first month in Hellaby has confirmed my view that the company has a strong and attractive future as a focused business owner of scalable innovative technology service businesses to industrial and commercial clients,” commented Clarke.
Results for the first half of the FY16 year are expected to be released on February 18. A further update on Hellaby’s strategic direction will be provided at that time.
