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Methven FY profit falls 20 percent on weak Australian market, still mum on acquisition

Wednesday 29th May 2013

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Methven, the tapware maker, confirmed a 20 percent slide in annual profit that it first flagged last month, due to a weak Australian market. It is still mum on a potential acquisition.

Profit dropped to $5.2 million, or 7.7 cents per share, in the 12 months ended March from $6.5 million, or 9.7 cents, a year earlier, the Auckland-based company said in a statement. In April it said profit would drop by about 21 percent. Sales sank 7.3 percent to $98.4 million, led by a 15 percent drop in revenue from Australia.

Chief executive Rick Fala said the company was in the "final stages of due diligence for an important business acquisition" which would create opportunities "across all facets of the business," but couldn't comment any further. It first mentioned the plan last month.

The board declared a final dividend of 4.5 cents per share, payable on June 28, with a June 21 record date. That takes the annual payout to 9 cents per share, down from 10 cents a year earlier.

The shares rose 0.8 percent to $1.24 yesterday, having shed 9.5 percent this year. The stock is rated an average 'buy' based on five analyst recommendations compiled by Reuters, with a median target price of $1.38.

The company expects to grow first-half and annual earnings this year, and will provide formal guidance at its annual meeting on July 30.

The New Zealand unit reported a 1.5 percent fall in sales to $33.5 million with an 18 percent slide in earnings before interest, tax, depreciation and amortisation to $6.6 million.

Methven's Australian business showed a 15 percent drop in sales to $41.8 million with a 4.1 percent fall in EBITDA to $4.7 million.

The UK unit lifted sales 0.9 percent to $22.8 million, and narrowed its EBITDA loss to $177,000 from $717,000 a year earlier.

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