Tenon doubles first-quarter earnings, on track for annual US$20 million target

Wednesday 21st October 2015

Tenon, which sells wood mouldings in the US, says underlying earnings doubled in the first quarter and are on track to meet its US$20 million target for the full year.

Earnings before interest, tax, depreciation and amortisation rose to US$6 million in the three months ended Sept. 30, from US$3.2 million a year earlier, and on par with the US$6 million it reported in its first half last year, the Taupo based manufacturer said in a statement. The figure included just under US$1 million of realised foreign exchange hedging losses and costs for its strategic review to boost its share price value.

After a decade of losses, Tenon last year returned to profitability and announced its first dividend in 17 years in August, as the US housing market, where it gets 90 percent of revenue, began to recover after being hit by the US sub-prime mortgage crisis and subsequent global financial crisis. In the 2015 year, the rebound in the US housing market, where a builder's confidence index is at a nine year high and new home permits are at an eight year high, and the depreciation in the New Zealand dollar against the US currency boosted Tenon's income.

The company is now gunning for full year Ebitda growth of 53 percent, accelerating from earnings growth of 18 percent to US$13 million in the year ended June 30.

Tenon has also hired Deutsche Craigs and Deutsche Bank to conduct a strategic review with the goal to come up with a "risk-adjusted path most likely to close the share price value gap".

Tenon shares last traded at $2.30 and have more than doubled over the past two years, having dropped as low as 50 cents during the sub-prime mortgage crisis and subsequent global financial crisis.

BusinessDesk.co.nz

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