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UPDATE: Metroglass confirms on track for full year, as interim sales rise 13%, shares gain

Friday 21st November 2014

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Metro Performance Glass, which has more than half of New Zealand's glass processing market, is on track to meet full-year prospectus forecasts as it benefits from a building boom in Auckland and Christchurch.

Profit in the two months ended Sept. 30 was $806,000, reflecting initial public offering costs of $3.92 million and $1.8 million in tax as it couldn't deduct IPO costs, the Auckland-based company said in a statement. It didn't provide a comparable profit figure. Sales rose 13 percent to $31.6 million in the two-month period. 

"It's two months, but the margins look good and were basically ahead of the full-year target, the revenue number looked in line," David Price a broker at Forsyth Barr said. "They've reconfirmed they're on track to confirm prospectus forecasts."

In the eight months ending March 31, 2015, the company expects profit of $9.4 million, on sales of $117.8 million. Metroglass won’t pay a dividend for this period and directors will decide next May whether to begin payments, the company said.

"Metro Performance Glass is performing well and in line with forecasts we set at the time of our IPO," chairman John Goulter said. "This reflects continued growth in the residential housing market and commercial property markets that continue to benefit from the resilient economy and the Christchurch rebuild."

Building consent numbers were on the rise at the start of the year, driven by the rebuilding of earthquake damaged Christchurch and a shortage of supply in Auckland, but in recent months have petered out. In September they recorded its biggest decline since 2012, government data shows, with uncertainty around the Sept. 20 general election blamed for the downturn. Economists said building consent activity is likely to pick up again, driven by housing shortages and strong population growth, following the return of Prime Minister John Key's National-led government for a third term.

Metroglass chief executive Nigel Rigby and chief financial officer David Carr told media during a teleconference that sales for the company lag building consents by about nine months, and that a pick-up in commercial building activity would help insulate Metroglass from a drop off in residential construction. 

Forsyth Barr's Price said the lag meant the rise in building consents at the start of the year was only washing through now.

In July the company raised $230.5 million to buy the Metroglass assets from its private equity owners Crescent Capital and Anchorage Capital and senior management. The private equity owners kept a combined stake of 18.5 percent and management retained 3.8 percent. Some $10.9 million went to cover the cost of the offer and $2.8 million went towards reducing debt. Net debt was about $50 million upon listing.

The private equity firm had taken control of Metroglass in 2012 after its previous owner couldn't manage the debt burden of the company.

Shares of Metroglass rose 1.6 percent to $1.97, paring an earlier gain to $2.00, and have gained 14 percent since listing. 


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