Methven is second NZ firm in 2 days to cut profit forecast citing building downturn

Thursday 13th October 2011

Methven, the manufacturer of tapware and bathroom fittings, cut its full-year profit forecast by as much as a third, citing a downturn in housing activity, especially in Australia.

The Auckland-based company said profit in the six months ended Sept. 30 fell about 25 percent to $3.2 million. Its forecast for the full-year was cut to $6 million to $8 million, from the $9 million estimate it gave shareholders at their annual meeting in July.

The shares fell 2.2 percent to $1.32 and have tumbled 20 percent this year. Yesterday Methven fell 1.5 percent after Fletcher Building, the nation’s biggest construction firm, gave its own profit warning, on a bleaker outlook for residential construction and possible further delays in the rebuild of Christchurch.

Fletcher declined 3 percent to $6.71 today, heading for the lowest close since July 2009.

Methven’s downgrade reflected “reducing construction activity, notably in Australia,” it said. Revenue in New Zealand has fallen, “largely due to delays to the Christchurch rebuild”, and building permits nationally being “materially down.”

Its UK business, which had to be restructured after losing its biggest customer, Focus (DIY), has returned to profit, earning $1 million in the first half. The company would continue to press on with its tapware offering for hotel chains, it said.

BusinessDesk.co.nz

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