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Methven profit meets forecast as sales drop 13%, FY dividend unchanged

Friday 18th May 2012

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Methven, the tapware and bathroom fittings manufacturer that dropped out of the NZX 50 this year, met full-year profit guidance even as its Australian and New Zealand sales weakened.

Net profit rose to $6.5 million, or 9.7 cents per share, in the 12 months ended March 31, from $4.7 million, or 7.1 cents per share, a year earlier, the Auckland-based company said in a statement. That was at the lower end of its $6 million to $8 million guidance given last year after the company cut its forecasts amid a downturn in Australian housing activity. Sales fell 13 percent to $106.2 million.

“With tough trading conditions in all of our key markets impacting revenue, the implementation of operational efficiencies and cost control measures ensured positive earnings growth was achieved in line with our October 2011 guidance to the market,” chief executive Rick Fala said. “We are confident we have the management teams and plans in place to be able to take advantage of any upturn in market conditions.”

The company's shares fell 0.9 percent to $1.15 in trading yesterday, having gained 7.4 percent this year. The stock was a straggler last year, shedding 40 percent in 2011, and is rated 'outperform' according to a consensus of five analysts compiled by Reuters. Analysts have an average target price of $1.20.

Methven's board declared a 5.5 cent per share final dividend, taking the total payout for the year to 10 cents, or $6.7 million.

The company didn't give guidance for the 2013 financial year, saying it would be "imprudent" given the "fickle and uncertain" markets.

Methven's Australian's unit reported a 7.3 percent decline in operating revenue to A$38 million, with earnings before interest, tax, depreciation and amortisation up 1 percent to A$3.8 million.

Its New Zealand business' operating revenue sank 11 percent to $34.8 million, with a 15 percent drop in EBITDA to $7.9 million.

Its UK unit, which lost its biggest client Focus (DIY) in 2011, reported a 21 percent slump in operating revenue to 11.5 million pounds, with EBITDA of 349,000 pounds.

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