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Metro Performance Glass shares sink 10% on muted outlook

Thursday 24th August 2017

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Metro Performance Glass shares fell 10 percent after the company said it expects its first half results to be largely flat despite the contribution from recently acquired Australian Glass Group.

"Given the current conditions we are seeing in the market, we expect the group’s first half results to be similar to those achieved in the first half last year, which was a particularly strong half," chairman John Goulter said in notes for the annual general meeting.  

The stock dropped as low as $1.19, the lowest it's been since listing in mid-2014, and was recently trading at $1.25. The shares were sold at $1.70 apiece in an initial public offering to raise $244.2 million, the bulk of which went to its former private equity owners Cresent Capital and Anchorage Capital. 

"Activity levels to date have been below our expectations and as we had resourced the business accordingly there will be a need to adapt and pursue efficiency initiatives through the second half of the year," he said. 

The flat result comes despite the contribution from Australian Glass Group, an A$43.1 million acquisition it made in September last year. At the time of the deal, Metro Glass said it expected the Australian firm to boost earnings from the first year. 

"The problem is that they have the acquisition in there ... so to be flat on last year is disappointing," said David Price, broker at Forsyth Barr.

Goulter said the Auckland-based company continues to anticipate improved results in the 2018 year "but this will be dependent on any adverse changes in market conditions. We will further update investors with our expectations for the full year when we release our half year results in November," he said. 

Metro Glass delivered a $19.4 million net profit for the year to March 31, down from $21.3 million a year earlier, as it absorbed the costs of the major acquisition in the Australian market and the impact of declining building activity in Canterbury and a dip in Wellington activity after the Kaikoura earthquake last November.

Earlier this week, Metro Glass said it will reduce annual non-executive directors' fees rather than seek a mandate to increase the available fee pool at today's annual general meeting in Auckland. The company had sought approval to increase the total annual remuneration available to all non-executive directors by $36,000 per annum to $650,000 to provide headroom for additional fees if needed. No changes were proposed to the current annual directors' fees for any director. It opted to pull the resolution after feedback from shareholders indicated it was not warranted. 


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