Leather takes the lead in Australian group`s profit projections
Australian leather and building materials group Schaffer yesterday predicted a 27% rise in full year net profits to around A$16.6 million ($898,000), citing a strong first half performance and the doubling of its stake in Australian Leather Holdings (ALH) to 83% in October 2001.
In the first half of 2002-03, earnings increased from A$6.7 million to A$9.8 million. However, the West Perth-based group company said growth in the second half would be slower, from A$6.3 million to A$6.8 million, because of the normal seasonal trend in both its leather and building materials divisions, as well as some fluctuations in the buying of its automotive leather. Speaking to the regional press, managing director John Schaffer commented that predicting demand from the automotive sector had become especially difficult because of the constant shuffling of models and leather types by the manufacturers.
Last year, the the leather business contributed 64 per cent of the company's EBIT (earnings before interest and tax) of A$24.6 million, with the remainder being split two thirds/one third between building products and property businesses. Net profits came in at $13 million, up from $8 million the year before.
Referring to the loss of GMH (General Motors Holden) account by the group’s Howe automotive leather arm in August, Mr Schaffer said that the contract winner, Eagle Ottawa, enjoyed heavy South African Government subsidies, whereas Howe was succeeding in international markets without government aid. In any case, the GMH business accounted for only 5% of Howe’s turnover, Mr Schaffer said.
