I was a little disappointed with this:
"Future dividends are likely to carry only partial imputation (~60%) as the growth in earnings is largely coming from Skellerup’s international operations."
However, on reflection it isn't really a surprise. Local manufacturing is directed towards the Agribusiness side of things, and even then the gumboots are made in Vietnam. It looks like most of the growth in the future will be in other areas, products made overseas for customers overseas. There are no imputation credits available for NZ shareholders from a manufacturing business that is structured in this way.
Given that the industrial division is the growth engine of the future, I was excited to see the break down by 'application' (p4 of the HY2018 presentation). I immediately looked back a year to see how the revenue streams had changed one year on. However no such equivalent break down was given in the HY2017 slide show. The emphasis there was on the geographical spread of sales and that wasn't mentioned this half year. I do find it frustrating when companies do this, although cynically you might easily be able to imagine why. But it does make it harder to truly track how a company is doing year on year.
On another note, net profit margin for HY2018 was: $11.7m /$166.7m = 7.0% (c.f. 8.9%for FY2017). This is well down and sets a new low for the company in recent years.
Annualised ROE for HY2018 was ($11.7m x2)/$163.090m = 14.4% (c.f. 11.8%for FY2017). This is a good improvement, tracking towards Buffett's 15% target.
Despite the headline NPAT figure being up, it looks like there are some very tough markets out there as regards profit margin. But of course we are only just starting. The new factories and production lines are ready, and once production approaches full capacity, just watch the ROE and net profit margin figures soar from here. Right fellow shareholders?
SNOOPY