While Methven hasn't provided any guidance for the year ending March 2012, its earnings are likely to be lower than previously expected, says Selwyn Blinkhorne, an analyst at Craigs Investment Partners.
“Given very modest Reserve Bank (forecast of) 0.9% GDP growth expectations in New Zealand, before Christchurch reconstruction starts, and subdued dwelling construction data in Australia and the UK, we have lowered our full-year 2012 forecast 7.7%,” Blinkhorne says.
He is now forecasting net profit for the year ended March this year will come in at $6.8 million after Methven downgraded its guidance from expecting flat net earnings to between $6.6 million and $7 million.
Blinkhorne says about half the $0.8 million to $1.2 million downgrade can be attributed to a potential bad debt from an Australian customer which is in administration and the balance was mainly due to the impact of the February earthquake in Christchurch and the January floods in the Eastern Australian states, particularly Queensland.
“Our full-year 2013 forecasts are essentially unchanged with solid revenue and margin growth forecast as Christchurch rebuilds and all the economies exhibit normal levels of economic activity,” he says.
Longer-term, Methven will focus on returning its British operations to profitability following the appointment of a new chief executive there, Steve Lee, the former chairman and chief executive of Bristan, the largest British tapware supplier and previous head of the British Bathroom Manufacturers Association.
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