Tapware maker Methven continues annual revenue and profit growth in 2016

Thursday 25th August 2016

Methven, the shower and tapware designer, has reported a 31 percent increase in full-year net profit to $7.7 million with strong sales in New Zealand and Australia, continuing a turnaround in its performance that started last year.

The Auckland-based company changed its reporting date from March 31 to June 30 and in the 15-month period profit was $8.6 million, it said in a statement. Reported 12-month sales revenue of $105.8 million was up 8.1 percent on the prior year in line with guidance and up 6 percent on a constant currency basis, its first material revenue growth since 2009.

Chairman Phil Lough said the results are in line with guidance for the fourth consecutive time and evidence of its improved revenue forecasting and internal controls.

The directors declared a partially imputed final dividend of 4.5 cents per share payable on Sept. 30, taking total dividends for the year to 9.5 cents.

Sales performance was highest in New Zealand where it rose 11 percent to $35.7 million supported by double-digit tapware growth while earnings before income and tax excluding non-recurring items rose 17 percent to $4.7 million.

In Australia, sales increased by 6.9 percent to $39.6 million with a strong performance in the showering category and a slight increase in earnings before interest and tax.

The UK market also showed a strong earnings increase of 122 percent to $553,000 though revenue fell by 2.3 percent to just under $12 million and below expectations due to a delayed start of contracts won during the financial year.

Net debt decreased 7.3 percent to $22.1 million through earnings growth and reducing inventory by $2.9 million and Lough said the company remains comfortably within its banking covenant limits.

Chief executive David Banfield said he was pleased with improvements made to the business throughout the year, though much work remains to be done. The company remains committed to lifting revenue to $130 million by June 2018 under a three-year strategic plan focused on its three key markets of New Zealand, Australia and the UK. Last year it turned around five years of revenue and profit decline but shareholders criticised the strategy as not being aspirational enough.

The group is targeting revenue growth of at least 5 percent and net profit growth of 10-to-20 percent in constant currency for the 2017 financial year, although the board warns net profit is likely to be flat at the half-year compared to the previous period.

In March, Methven launched its new patented shower spray technology Aurajet and industry-first Ecobrass lead and heavy-metal free tapware range globally. Aurajet is now the most awarded product in the company’s history with design awards achieved in the past financial year in America, Europe, Australasia, and the UK.

More than $3.7 million in expenditure was invested during the year on future focused activity including new product and brand development and building digital, manufacturing and environmental capability.

The company will celebrate its 130th year in business next month.

The shares last traded at $1.31, and have gainede 14 percent this year.

BusinessDesk.co.nz

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