Graham Leaming: Skellerup Chief Executive celebrates record first half net profit amid tariff worries

Manufacturing company Skellerup has posted a record first half net profit, up 20% to $28.9 million - and they've upgraded their full year earnings guidance.

The tariff hit is now expected to be just $2.5million this year - about half of what they originally feared. 

Chief Executive Graham Leaming told Mike Hosking that the company has made an effort in the US, and says the company's actions have helped prepare for the tariffs. 

"We have a strong presence on the ground in the US. We've got 50 people over there, so we understand our customers well and we understand the market well."

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Episode Transcript

Speaker 1 (00:00):
And kep what has been a pretty solid week for
this country. When it comes to solid economic readings. We
end up with scalar Up, who posted a record return,
as Andrew alluded to a couple of moms ago. First
half net profit up twenty percent. They've upgraded the full guidance.
Graham Leaving is the scaler Up chief executive and he
is with us. Graham morning, Good morning, Mike, Congratulations, you're
feeling pretty good.

Speaker 2 (00:20):
Yeah, we are feeling pretty good. Good good first half
result and a good start to the financial year.

Speaker 1 (00:25):
That terriff news out of America not being as bad
as you thought, was that you overestimating how bad it
could be, or have you done something material to get
around them? Now?

Speaker 2 (00:35):
I think it's the actions we've taken, our people have taken.
We have a strong presence on the ground in the US.
We've got fifty people over there, so we understand our
customers well and we understand the market well. And you know,
what we've been able to do is not only pass
on some of that cost in terms of increasing prices
to customers, but we've been pretty hard on the other

(00:57):
side of the equation in terms of pushing some of
the cost out of the business as well. So it's
the net impact of those actions really, and we always
had a plan and a target to do that, but
of course you've got to achieve it. So ye need
impact to us is less than we might have anticipated
twelve months ago.

Speaker 1 (01:13):
Is it a quality story? People, even in a tariff environment,
will pay for good stuff.

Speaker 2 (01:20):
Yeah, it is a quality story. A lot of what
we make is pretty critical to the customers and applications
that our products are used in, and we've got some
long standing customers and relationships in that market. So yeah,
I think probably we perceive there was some macro risks
that may impact on demand in the US, and the

(01:40):
US markets held up a little bit stronger than we
thought it possibly might. But it is a quality story,
good products, long standing customers, they have products, sorry, we
have products that they need.

Speaker 1 (01:52):
Yeah. Eighty two percent of your business is offshore. I
think most New Zealanders when they think scale ups still
think gum boots. And you're so much more more than that.
Of what you do offshore. Is it all going well?

Speaker 2 (02:05):
Yes, it is. And as you say, more than eighty
percent of a revenue is generated off store offshore, and
we're an international business in a manufacturing sense as well.
New Zealand's are very important manufacturing based to US and
market to US, it's our second largest market, but we
do manufacture a lot of product in international markets as well,
so it is a combination of what we do in

(02:28):
New Zealand and what we do in in other places
in the world as well.

Speaker 1 (02:31):
How would you argue you're handling what is a pretty
tumultuous world. For get tariffs in the US, the whole
world's up in the air at the moment. How are
you handling that?

Speaker 2 (02:41):
Well, probably just focusing on the things that we can control. Obviously,
there's been a sequence of events, I guess over the
last few years. We've had the COVID interruptions and the
impact that had on time frames to ship products. You know,
there's some things you can do in the short term
in terms of beefing up your inventory levels and anticipation
of changes might materialize, and that's something we did ahead

(03:01):
of tariff's It was pretty well full shadowed that if
Trump was elected there was going to be some increases
in tariffs. So you can give yourself some time by
taking actions like that in terms of increasing your inventory levels.
But I think you know, the other really important thing
is making sure you have people, good people in the
markets where you are engage with customers and selling products,

(03:22):
and that gives you a really good chance of being successful.

Speaker 1 (03:25):
It's a great story. Congratulations again us to talk to
your Graham Leman, who's the scaler up chief executive. For
more from The Mike Asking Breakfast, listen live to news
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