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Methven expects revenue, profit growth this year after a decline in 2013

Tuesday 30th July 2013

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Methven, the tapware maker which posted a 20 percent drop in profit last year, expects solid sales and profit growth in the current financial year. Its shares rose 2.3 percent.

"We are targeting solid sales and net profit after tax growth for the first half and full year of 2013/14," chairman Phil Lough said in a statement for delivery to the annual meeting in Auckland today. "We are determined to build the revenue line back in Methven. That is our principal task and is what we will be reporting in the future."

Profit fell in the year ended March 31 as sales slumped 15 percent in a weaker Australian market and slipped 1.5 percent in New Zealand, while edging up just 0.9 percent in the UK. The outlook is more upbeat this year, with an improved market outlook for New Zealand and improving returns from the UK offsetting tough Australian market conditions, the company said today.

Shares in Methven rose 3 cents to $1.33, reducing their decline so far this year to 5.1 percent.

Methven is pursuing growth opportunities in China and emerging markets and expects growth through its innovative designs and greater marketing focus, the company said.

In New Zealand, first-quarter sales are tracking ahead of last year, flowing through to improved earnings before interest, tax, depreciation and amortisation, chief executive Rick Fala said in notes for the annual meeting.

In Australia, sales are stable, however margins have weakened as the market becomes more competitive, resulting in lower earnings, Fala said. The company is maintaining tight cost control and focusing on opportunities for growth in an attempt to turn around the sales decline and maintain earnings, he said.

In the UK, first quarter sales are stable with improved margins and lower operating costs, Fala said. The UK unit is expected to continue its modest top line and earnings growth, he said.

In China, first quarter sales are up significantly with improved margins and a small increase in operating costs, Fala said. Methven said yesterday it had agreed to buy its Chinese manufacturer which should boost margins and profits.

Methven's net debt, which jumped 48 percent to $17.2 million last year because of higher stock levels in Australia, is now back to normal and comfortable within bank covenants and facilities, the company said.

Meanwhile, the company is in the final stages of recruitment for a new chief executive with a proven track record and expertise in international marketing and brand development, to replace Fala who is stepping down on Sept. 30, Lough said.

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