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Stainless steel manufacturer signals bigger loss

2015/8/24      view:
Christchurch stainless steel manufacturer Mercer Group may sell its interiors division as well as signalling a $7.8m earnings loss before finance costs and tax.

The listed company released the increased loss position for the year to June 2015 after saying a month ago it expected a loss of $600,000 to $800,000 before interest, tax, depreciation and amortisation, (ebitda).

Its shares were steady at 10c a share.

The update on Tuesday said the company was looking to exit the Mercer Interiors business at a suitable time.

It was also writing down the value of its assets in the interiors and medical businesses and taking impairments on its intangible assets.

Together these amounted to a $6m charge which would result in an earnings loss of $7.8m before finance costs and taxation.

The Christchurch company is backed by interests associated with financier Humphry Rolleston.

The new chief executive Richard Rookes said after a review of the business that the company would focus on three areas. The first was developing further its food processing technology business - the Titan food slicer, "Beta" range and other products. Another was commercialising its patented S-Clave sterilisation technology and the third was growing its stainless steel fabrication business.

The stainless steel fabrication business was expected to post record earnings before interest, tax, depreciation and amortisation (ebitda) of $2.1m for the June 2015 year.

The division had diversified away from its reliance on the dairy industry and had a strong order book for the 2016 financial year.

The Titan Slicer was expected to post an ebitda loss of $1.2m after two of eight sales announced earlier did not complete. The operational issues had been resolved and the division would have a strong focus on the North American market and on Australia and New Zealand, the company said.

It was confident of solid progress for the Titan division in the 2016 financial year. And it still had the funding support of Callaghan Institute for its S-Clave technology.

The company said it had world-class technologies with global applications that would be its focus and supported by its stainless steel business.

Former chief executive Rodger Shepherd, hired four years ago to turn around the business, would resign as a director, the company said, after a month ago saying Shepherd would remain as a director.