New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Skellerup (SKL) FY21 Result Initial Impressions — Firing on all Cylinders</h2>
Skellerup (SKL) has reported a stellar result, with a record FY21 NPAT of NZ$40.2m, up +38% on the prior year period and +6% ahead of expectations (FB and consensus NZ$38m). Performance was broad based, although the key beat versus our expectations was in the Industrial division, with further market share gains across a range of products and a strong margin maintained.
SKL announced a final dividend of 10.5cps (50% imputed, FB forecast 9.0cps), taking the full year to 17.0cps.
Outlook and view
SKL has delivered a standout FY21 result, firing on all cylinders. While the operating backdrop is favourable for a number of product lines, namely construction and appliances, we are encouraged by the fact SKL also achieved market share gains within those areas. We view SKL’s operating model shift in recent years to focus on providing OEMs (original equipment manufacturers) as creating a more resilient earnings base. In addition, in roads made with OEM customers should help provide a platform for further growth over the medium-term.
We expect the favourable backdrop to continue near-term, although note the impact of rising input costs and supply chain disruption are key questions for management on the post-result call.
Conference call details — 10:30am NZT
SKL will host a post-result investor conference call at 10:30am NZT via Zoom — Link&nbsp;<a href="https://zoom.us/j/94796040769?pwd=bGZtaEFTZ3l4L1VQZnRhZHBLNHhZQT09" target="_blank" data-saferedirecturl="https://www.google.com/url?q=https://zoom.us/j/94796040769?pwd%3DbGZtaEFTZ3l4L1VQZnRhZHBLNHhZQT09&amp;source=gmail&amp;ust=1629418646436000&amp;usg=AFQjCNGTPJwjK7Rf96_OY1uCd0mnnuFxlg" rel="noopener">HERE</a>&nbsp;(meeting ID: 947 9604 0769,&nbsp;passcode: 950160). Alternatively, investors can&nbsp;dial in +64 9 884 6780&nbsp;(Australia +61 2 8015 6011).
Key result take outs
<ul>
<li>Agri EBIT NZ$30.5m, up +20% on the prior year period — Solid performance in core Australasian markets with strong growth in target European markets. Margin expansion driven by further operational gains.</li>
<li>Industrial EBIT NZ$32.7m, up +57% on the prior year period — Growth was broad based across the product range and markets. Encouragingly strong margin expansion achieved in the first half was maintained, driven by a combination of operational efficiencies and exiting of a lower margin product line. Key areas to call out include a lift in construction linked products and a recovery in potable and waste water products, as well as market share gains in both product segments.</li>
<li>Net debt of NZ$8.7m — 0.1x Net debt/EBITDA. SKL has had success in the past pursuing a bolt-on acquisition strategy. We expect this to resume as border restrictions ease.</li>
</ul>
FY21 result summary (NZ$m)
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.1&amp;permmsgid=msg-f:1708467759337505942&amp;th=17b5b26011850496&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ8EPYg-F9uQwn3WfVJ6fwbSIjqqp738WFyyEisipTC1YUFvN1_o-yh7Kvqu0dJOME7LnABlE88N93us1ka6Se6YwQDpXl5Om0Mnhz4AFhGjGavFu4UQRJP_PiA&amp;disp=emb" width="491" height="446" class="editor-image img-responsive" data-image-whitelisted=""></figure>
Source: Company reports, Forsyth Barr analysis

Skellerup (SKL) FY21 Result Initial Impressions — Firing on all Cylinders
Skellerup (SKL) has reported a stellar result, with a record FY21 NPAT of NZ$40.2m, up +38% on the prior year period and +6% ahead of expectations (FB and consensus NZ$38m). Performance was broad based, although the key beat versus our expectations was in the Industrial division, with further market share gains across a range of products and a strong margin maintained.
SKL announced a final dividend of 10.5cps (50% imputed, FB forecast 9.0cps), taking the full year to 17.0cps.
Outlook and view
SKL has delivered a standout FY21 result, firing on all cylinders. While the operating backdrop is favourable for a number of product lines, namely construction and appliances, we are encouraged by the fact SKL also achieved market share gains within those areas. We view SKL’s operating model shift in recent years to focus on providing OEMs (original equipment manufacturers) as creating a more resilient earnings base. In addition, in roads made with OEM customers should help provide a platform for further growth over the medium-term.
We expect the favourable backdrop to continue near-term, although note the impact of rising input costs and supply chain disruption are key questions for management on the post-result call.
Conference call details — 10:30am NZT
SKL will host a post-result investor conference call at 10:30am NZT via Zoom — Link&nbsp;HERE&nbsp;(meeting ID: 947 9604 0769,&nbsp;passcode: 950160). Alternatively, investors can&nbsp;dial in +64 9 884 6780&nbsp;(Australia +61 2 8015 6011).
Key result take outs

Agri EBIT NZ$30.5m, up +20% on the prior year period — Solid performance in core Australasian markets with strong growth in target European markets. Margin expansion driven by further operational gains.
Industrial EBIT NZ$32.7m, up +57% on the prior year period — Growth was broad based across the product range and markets. Encouragingly strong margin expansion achieved in the first half was maintained, driven by a combination of operational efficiencies and exiting of a lower margin product line. Key areas to call out include a lift in construction linked products and a recovery in potable and waste water products, as well as market share gains in both product segments.
Net debt of NZ$8.7m — 0.1x Net debt/EBITDA. SKL has had success in the past pursuing a bolt-on acquisition strategy. We expect this to resume as border restrictions ease.

FY21 result summary (NZ$m)

Source: Company reports, Forsyth Barr analysis

Skellerup (SKL): FY21 Result Initial Impressions — Firing on All Cylinders

Skellerup Holdings

Skellerup (SKL): FY21 Result Initial Impressions — Firing on All Cylinders