Methven's UK unit will lift group profit in tough markets

Tuesday 29th July 2008

Methven, the tap-ware maker whose stock outperformed the NZX 50 Index in the past three months, said a full-year's contribution from its UK unit and growth in Australia will help lift earnings this year.

Net income may rise from the NZ$9.8 million posted last year, though earnings growth may not match 2008's
28% growth.

"At this point we still expect earnings growth in 2008-2009," chief executive Rick Fala told shareholders at their annual meeting today. Still, "the market is extremely tough and while we have to cut our cloth to adapt to the climate we expect conditions will only get tougher in the short term."

Shares of Methven have gained about 6% in the past three months, while the NZX 50 fell 10%. The company expanded to the UK last year with its NZ$59 million purchase of Deva Tap Co., more than tripling its distribution and lifting sales outside of New Zealand to 64% of revenue.

"Deva was a major milestone, changing the scale of the Methven business and catapulting us onto a wider international stage," Fala said.

He was less optimistic about the New Zealand market, where he expects "softer earnings" this year. The stock was unchanged at NZ$1.60.

Figures today showed home building consents in New Zealand tumbled 20% in June, adding to evidence the housing market is contributing to the economy's slump.

By Jonathan Underhill

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