24 Jun 2013

Mercer positive despite profit guidance downgrade

10:04 am on 24 June 2013

Stainless steel products company Mercer Group is positive about the outlook for its next financial year despite having to downgrade its profit guidance for this year.

Chief executive Rodger Shepherd says he now expects the operating profit will be between $2.2 million and $2.5 million for the 12 months ending this month, down from the $3 million it was forecasting in February.

However, that compares with the $1.2 million operating profit from continuing operations Mercer reported for the 2012 year.

He says there is currently a lot of dairy activity, general packaging and food equipment work.

Mr Shepherd says the interiors business owned by Mercer is tied to the construction sector where there has been a lift, although it hasn't been as fast as was expected 12 months ago.

He says the reason for the profit downgrade is that two large sales will not not happen until early in the next financial year.

They are the sale of the company's Titan Slicer, which designs and makes equipment to slice meats and cheese, and of a licensing agreement relating to its medical sterilising technology with a large multinational company.

Mr Shepherd says he can't yet say how much the technology licensing deal is likely to be worth to Mercer but he intends to provide full details when the company announces its full-year results.

Mercer shares closed at 17 cents on Friday.