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Methven forecasts a better result

Thursday 22nd July 2010

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Tap-maker Methven is forecasting a "better result" in the financial year to March 2011, but says the fragility of the New Zealand and UK economic recoveries make it "foolhardy" to put a number on it.

"We're picking a creditable improvement in profitability for the full year, holding net debt to current levels even after an anticipated increase in debt of 15% to 20% at half year due to planned capital expenditure for growth," chairman Phil Lough told shareholders at the company's annual meeting in Auckland today. 

Methven reported fall of 22.2% in net profit after tax, counting impairments of $481,000 on its UK business, to $7.8 million in the year to March 31.  The shares rose 4.8% to $1.52 today, but remain down 12.1% for the year to date.

The UK market remained "very depressed", but the company continued to reinvest in its top-end and hotel retro-fit products for that market while withdrawing from the do-it-yourself market, with Methven-branded products proving to be "consistently robust earner."

In New Zealand, the company was "not banking on any huge recovery."

"Australia will be the dynamo for growth again," Lough said.

The company was now concentrating hard on the hotel market, where its Jemflo and Satinjet systems were giving guests more even-temperatured showers while lowering energy and water use for the hotels themselves.

Some 60,000 Jemflo pressure regulators and 13,000 Satinjet hotel bathroom retro-fits had now been undertaken, with a specialist marketing team targeting Australasia and Asia and a new team being established for the UK and Europe.

Managing director Rick Fala, director David Mair, and Lough were re-elected to the board.

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