Hellaby expects to complete at least one acquisition this year

Hellaby Holdings [NZX: HBY], the diversified investment company, expects to proceed with at least one acquisition this financial year as it looks to further broaden its portfolio.

The Auckland-based company has several potential acquisitions on the cards and is "optimistic that at least one will come to fruition during this financial year," chief executive John Williamson told Hellaby shareholders at its annual meeting according to speech notes. The company has been on a buying spree over the past 12 months, purchasing a truck servicing business, an auto electrical, fuel and engine management components firm and 85 percent of Contract Resources, a specialised engineering maintenance and industrial cleaning company. It is looking to capture earnings growth from a more diversified portfolio.

"Experience has shown us the benefits of an investment portfolio of assets with earnings spread across different geographies and sectors," Williamson said. "The ongoing acquisition of businesses that meet our investment criteria, and deliver the next step lift in earnings, remains a priority."

In August, the company posted a loss of $1.1 million, in the 12 months ended June 30, compared to a profit of $18.2 million, a year earlier. Stripping out a $26.8 million charge on the goodwill of its Hannahs and Number One Shoes brands, earnings rose 44 percent to $26.8 million, ahead of its $25 million guidance given. Revenue grew 35 percent to $736.4 million.

Williamson told shareholders in the three months ended Sept. 30, group sales and earnings were ahead of the same period a year earlier, with four out of its five divisions reporting profit "well ahead" of last year, including both Contract Resources and the footwear division. Its packaging unit was impacted by a manufacturing plant relocation.

Hellaby expected to be insulated against any downturn in the dairy or logging sector, where commodity prices have dropped since the start of the year, because of its more diversified portfolio. Williamson said the company had "significant borrowing capacity" for further acquisitions.

Shares of Hellaby were unchanged at $2.92 and have fallen some 10 percent since the start of the year. The stock is rated an average of 'buy' according to the consensus of four analysts surveyed by Reuters, with a median price target of $3.45.

(BusinessDesk)