Mitre 10 pays biggest dividend in at least 17 years

Friday 4th November 2016

Mitre 10 (New Zealand), the cooperative that services the Mitre 10 hardware chain, paid shareholders their biggest dividend in at least 17 years as profit soared, thanks to a lower wage bill and as growing consumer demand drove up sales.

The Auckland-based company paid dividends of $5.8 million in the year ended June 30, up from $1.8 million a year earlier, giving the biggest return since at least 1999, according to financial statements lodged with the Companies Office.

Mitre 10 posted a profit of $3.2 million, up from just $106,000 in 2015 when it spent more on land and rent for future stores, with wholesale revenue rising 8.7 percent to $766.9 million. While that was sold at a skinnier gross margin of 9.8 percent than the 12.3 percent achieved in 2015, Mitre 10 cut its wage bill by 24 percent to $30 million in the year.

Mitre 10's income from selling services to members rose 53 percent to $15 million and rental income almost doubled to $1.8 million.

In a separate statement, Mitre 10 said network sales from its stores rose 9.4 percent to $1.24 billion, implying margins for the 81 owner-operator stores maintained their gross margins at about 38 percent.

"Our financials show Mitre 10 is doing extremely well in a competitive retail and trade environment," chief executive Neil Cowie said. "We're extremely pleased with the overall growth and direction of the cooperative and have been in the process of implementing transformational changes in our business to ensure this success will continue."

New Zealand's booming property market has been a boon for hardware chains such as Mitre 10, Bunnings, Carters and the Fletcher Building-owned Placemakers, driving demand for building, hardware and garden supplies. Government figures show retail spending on those products rose 10 percent to $6.74 billion in the year ended June 30, or 8.6 percent when adjusted for inflation.

The hardware chain cooperative sold its Whangarei, Rotorua and Whangaparaoa stores during the period for $8.3 million at a loss of $164,000, and a further store was sold after the balance date.

Mitre 10's members voted for a capital restructure in April requiring each store member to increase their $75,000 share subscription to $100,000, though the conversion of other share classes meant only $122,000 of new equity was raised.

The members also voted to increase the directors' remuneration to $600,000, including all fees from additional committee work. That was the first increase in directors' fees for five years, over which time revenue increased 52 percent. However, it came in a year when chairman Martin Dippie, whose pay rose 9.8 percent to $112,000, was ordered back to the negotiating table with the First Union by the Employment Court, which found his Jacks Hardware and Timber firm had misled the union to prevent strike action.

The union, which was representing 25 of Jacks' 170 staff, has been in facilitated bargaining with Dippie's company and a spokesman said the Employment Relations Authority facilitator is expected to make a recommendation next week.

Stores owned by Mitre 10's board accounted for about $208.8 million, or 27.2 percent, of the company's sales, up from $181 million, or 25.5 percent, a year earlier.

BusinessDesk.co.nz

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