UPDATE: Hellaby returns to profit in 2015; eyes Australian auto sector

UPDATED: Hellaby Holdings [NZX: HBY], the NZX-listed diversified investment company, returned to profit in 2015 as it benefited from a series of acquisitions a year earlier, and has decided to put its footwear units up for sale after writing down their value in 2014, while looking across the Tasman for new purchases.

The Auckland-based company posted a profit of $23.4 million, or 28.6 cents per share, in the 12 months ended June 30, from a loss of $129,000, or 1.2 cents, a year earlier, it said in a statement. The year-earlier result included a $26.9 million writedown on the value of its Hannahs and Number One Shoes businesses, and stripping out that charge, earnings were up 6 percent, bolstered by full-year contributions from Australian battery distributor Federal Batteries, New Zealand auto components distributor Dasko and truck servicing firm New Zealand Trucks.

Chief executive John Williamson, who is set to leave the company after seven years in charge, told BusinessDesk the company is looking at acquisition opportunities in Australia as the economy cools. "It's not a bad time to look at acquiring businesses over there. Multiples are reasonable on both sides of the Tasman."

Williamson said the company has been transitioning its portfolio over the past seven years to transition into a growth orientated investor, and retained a "very strong balance sheet" to help fund new acquisitions. The firm had cash and equivalents of $9.5 million as at June 30, and net debt of $63 million.

Hellaby sold its Elldex Packaging units in May this year for $33.1 million and contributed $477,000 to annual profit, which managing director John Williamson said at the time balanced out earlier acquisitions.

The company has decided its footwear division is no longer a core part of its investment portfolio, and Williamson said in a statement the company will look "to divest our two footwear businesses at an appropriate time."

The Hannahs and Number One Shoes brands have struggled in recent years as traditional apparel retailers try to fend off online rivals with lower overheads, and the unit posted a 6.5 percent decline in annual earnings before interest, tax, depreciation and amortisation of $5.8 million, on a 3.4 percent dip in sales to $140.8 million.

The company said it expects to lift earnings in the 2016 financial year.

The board declared a final dividend of 12.5 cents per share, payable on Oct. 2, with a Sept. 25 record date. That takes the annual return to 21.5 cents, up from 15 cents a year earlier.

The shares increased 0.7 percent to $2.84, and have dropped 10 percent this year.

Williamson said the share price was still undervalued after Hellaby generated strong returns to shareholders.

"The market has missed an opportunity with Hellaby," he said. "I would argue we offer real value."

Hellaby's oil & gas service unit lifted ebitda 13 percent to $18.5 million on a 15 percent gain in sales, while its automotive division boosted earnings 6.2 percent to $25.6 million on an 8.1 percent rise in revenue to $200.2 million. The company's equipment division increased sales 6.9 percent to $208.7 million, for a 16 percent gain in ebitda to $14 million.

The packaging division posted a 44 percent decline in earnings to $2 million on a 2.7 percent dip in sales to $43.6 million, before Hellaby divested the unit in May.

Chairman Steve Smith said the company is well advanced in its search to replace departing CEO Williamson, and expects to make an announcement before Hellaby's annual meeting on Oct. 1.

Williamson said he hadn't decided on what he will do next, but said he had another 20 years left in him, and will look for a corporate leadership role or something in private equity.

(BusinessDesk)