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Mercer worst-performing stock on NZX this year

Mercer Group, the stainless steel fabricator and manufacturer, widened its annual loss after only one of its units turned a profit and it wrote down the value of its assets.

The Auckland-based company posted a loss of $6.7 million, or 2.21 cents a share, in the 12 months ended June 30, from a loss of $457,000, or 0.17 cents, a year earlier, it said in a statement. Mercer posted a $7.9 million loss before finance costs and tax, after forecasting a loss of $7.8 million a fortnight ago. The result included $6 million in write downs across goodwill, tangible and intangible assets and inventory.

Mercer is the worst-performing stock on the S&P/NZX All Index this year, having shed 60 percent of its value. The company is considering selling its unprofitable interiors and medical divisions to focus on its core businesses including Titan Slicers, stainless steel fabrication and food-processing technology.

The stainless fabrication unit was the company’s only profitable business in the 2015 financial year. Its earnings before interest, tax, depreciation and amortisation increased to $2.1 million from $1.3 million a year earlier as revenue rose 19 percent to $29.8 million.

Its Titan Slicer division, which designs and sells specialised food-cutting equipment and other products manufactured by the fabrication unit, turned to an Ebitda loss of $1.3 million, from a profit of $12,000 a year earlier, as revenue slipped 2.5 percent to $4.1 million. The loss is wider than the $1.2  million forecast a fortnight ago. At the time, the company said the prospects for the development of its disruptive S-Clave sterilisation technology remained strong, with the support of continued government research and development funding.

The Mercer Technologies unit, which manages the research and development of the group, turned to an Ebitda loss of $70,000 from a profit of $850,000 a year earlier as revenue slumped 93 percent to $69,000.

The company wrote down the value of assets at its Mercer Interiors unit, which makes and supplies sinks, basins, tubs, toilets and similar products, to $4.8 million from $8.5 million a year earlier. Its annual loss narrowed to $94,000 from $521,000 a year earlier as revenue slipped 7 percent to $7.8 million.

Similarly the value of its Medical unit, which supplies equipment and related products and services for sterilisation, washing and disinfection, declined to $1.9 million from $2.8 million a year earlier. It turned to an Ebitda loss of $369,000 from a profit of $468,000 a year earlier as revenue slid 6.3 percent to $3.4 million.

Revenue in the 2015 financial year increased 6.8 percent to $43.6 million, lagging the company’s earlier target for revenue growth of at least 10 percent.

Mercer shares last traded at 8 cents. Its net tangible assets per share fell to 3.4 cents from 4.79 cents a year earlier.


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