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Hills says that it will focus on sustainable products line
08/08/2007 - Hardware, building products and electronics firm Hills Industries Ltd expects a modest increase in profits in 2008, with a continued focus on its sustainable products business.
Hills, which makes the Hill Hoist clothes line, on Tuesday announced a net profit of $47.17 million for 2006/07, up from $43.26 million in the previous financial year.
Hills chairman Jennifer Hill-Ling said the performance would continue into 2008, albeit curtailed by the lack of acquisitions on the immediate horizon.
"We have growth and profit improvement initiatives underway across all business units," Hill-Ling said.
"In the absence of any major acquisitions we expect the group to achieve a modest increase in profit this year although there are a number of uncertainties, which have yet to be evaluated.
"In particular, the acquisition of Smorgon Steel by OneSteel and the purchase by BlueScope Steel of the Smorgon distribution assets is both a risk and an opportunity."
Revenue for fiscal 2007 rose by 8.8 per cent to $1.01 billion, while earnings per share increased by 6.6 per cent to 27.6 cents.
The directors announced a fully franked dividend of 14 cents per share, taking the full-year dividend to 27.5 cents.
The dividend for 2006 was 26 cents.
Operating profit for the home, hardware and Eco products arm of Hills rose by 12.1 per cent to $13.82 million.
The result was helped by strong sales of its new generation Hills Hoist, with Hill-Ling promising further product launches before the end of the year.
"The new-generation Hills Hoist was released to the public in the second quarter of calendar 2007 and has achieved strong sales," she said.
"Further new product introductions will make their way into the market in the course of the next six months."
Hills would continue to focus the home and hardware division on the growing market for sustainable products, Hill-Ling added.
"Part of the reshaping of this business segment is to focus on products relating to building sustainability, which has gained real momentum in Australia," she said.
"Our objective of broadening our Eco product offer targeting the building sustainability market will gain momentum during 2008."
Hills' building and industrial products business recorded a 34.6 per cent jump in operating profit before interest and tax to $36.03 million.
The growth in the building products arm was due partly to an improved performance of the Orrcon Pipe & Tube business, Hill-Ling said.
"(Orrcon) had an improved result in the 12 months, although market conditions remain very competitive," she said.
"There are a number of water and oil and gas projects on the drawing boards around Australia, and we were pleased to secure a major contract with the Eurobodalla Shire (in NSW) in June 2007 to supply around $10 million of spiral welded pipe later this calendar year.
"In May 2007 Orrcon acquired the Impressive Steel distribution business in Bunbury in Western Australia, which is consistent with our strategy of improving our distribution footprint ... to ensure that we participate in the supply of steel to major infrastructure and mining projects."
However, the company's electronic security and entertainment business posted a 6.8 per cent drop in operating profit before interest and tax to $31.73 million.
The fall followed a 44.5 per cent rise in 2006 and 26.5 per cent rise in 2005, Hill-Ling said.
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