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Skellerup sets $500m target
28 November 2006
By ALAN WOOD

Skellerup Industries has set itself an ambitious $500 million sales target over the next five years with acquisitions of non-mature firms a key way of driving that growth.


Skellerup's twin Christchurch-Auckland management teams have also upped the company's export drive, aiming to increase international sales to 60 per cent of revenue in the next 12 months.

"That could well expand to upward of 80 per cent in the next five years when we'd like to be a $500 million sales company," Christchurch-based chief operating officer Mike McKessar said.

The rubber and polymer product maker was building on revenues of $122 million in 2005 and $159 million in 2006 toward $190 million to $200 million in 2007. "Everybody considers us a gumboot-manufacturing company, but that's just $10 million (annual revenues), less than 5 per cent of our business."

Skellerup, a top-50 listed company, is part of the annual New Zealand Trade and Enterprise Export Awards, to be held in Auckland on Thursday. There are seven sector-based awards.

The company had a target to improve on the June 30, 2006, $13.4 million net profit by at least 7 per cent. This required more work, considering it had benefited from strong currency hedging positions till recently. It wanted to compound that 7 per cent growth each successive year in the next five years.

Mr McKessar said the export strategy was based on organic growth and the acquisition of businesses or products closely aligned to its existing core businesses.

AdvertisementAdvertisementWith bank debt of about $94 million, funding of larger acquisitions would require raising capital.

Of Skellerup's 950 staff, about 260 are in Christchurch, with 150 in China based mainly at a new manufacturing plant about four hours north of Shanghai. There are 40 in the United States, 30 in Britain and 100 in Australia.

Typical of the export growth strategy, research and development staff were close to completing a firefighter's boot to meet specifications from several countries. "This market alone is worth around $100 million annually ... We know we've got a good price position in terms of where we're at with our Chinese manufacturing facility," Mr McKessar said.

Skellerup's Shanghai facility has enabled it to remain competitive in the manufacture of various products, including gumboots and vacuum pumps.

The acquisition of Australian company Deks in 2003 made Skellerup one of the largest producers of the rubber components of roof flashings in the world, he said. In the 2007 year its revenues would hit about $18.5 million.

Technical rubber product maker Gulf Rubber, bought for $32 million in January, had targeted revenues of $35 million.

Mr McKessar said the buoyant mining resources market in Australia had driven up demand for Skellerup's rubber components. It was the third largest manufacturer of dairy industry-related rubberware in the world.