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Tapware designer sees profits leak

Monday 30th May 2011

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Luxury shower and tapware designer Methven reported a 39.3% fall in full year net profit to $4.7 million, after providing for the loss of $2 million relating to British customer Focus (DIY) which went into voluntary administration.

Operating revenue for the year to March 31 fell 6% from the year before to $122.1 million, although sales in Australia rose 12.1% to $A41m (NZ$53.6m).

Group chief executive Rick Fala said the year had been challenging, compounded by the loss of Focus (DIY) which was Methven's largest British customer, while the Christchurch earthquakes affected domestic sales.

The British business had been expected to breakeven, but the loss of the Focus (DIY) result in an eventual loss of Stg1 million (NZ$2 million).

Fala was confident Methven's strategies would return its British operations to profit in the coming year.

In Australia the company had managed to grow its market share in the past year, as a rollout of new products combined with Methven's sales methodology, Fala said.

While New Zealand performance was weaker, much of that was due to building and renovation activity holding at historic lows and the impact of the Christchurch earthquakes.

The outlook for the company next year was more promising as it expected to reap the benefits of action which it started to take last year.

Net profit after tax was forecast to be more than $8.5 million - more than 25% up on last year before the one-off loss of Focus (DIY).

Excluding the loss of Focus (DIY), Methven's net profit for last year would have been down 13.7% to $6.7 million.

In the coming year, profit was expected to continue growing at the company's Australian operations, Fala said.

In this country performance was expected to be static until the Christchurch rebuild got fully under way, with the market expected to drop in the short term.

A final dividend of 4.5c per share is to be paid, down from 5.5cps the year before.

Methven were down 1c to $1.40 shortly after the sharemarket opened.



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