Methven Maintains Profitability and Delivers Dividends
NZX Statement 29 November, 2012
Methven Maintains Profitability and Delivers Dividends
• Results broadly in line with guidance.
• Group reported NPAT fell 27.4% on the prior corresponding period from $3.2 million to $2.3 million.
• Underlying Group NPAT2down 19.5% from $2.9 million to $2.3 million.
• Net Debt increased 10.5% from $17.4 million to $19.2 million.
• Group Operating Revenue down 7.2% from $54.2 million to $50.3 million.
• EBITDA1down 14.2% from $6.8 million to $5.8 million.
• Both Australia and New Zealand delivered an increase in EBITDA1.
• UK EBITDA1 down as increase in sales resource only delivered modest sales increase.
• Partially imputed interim dividend of 4.5 cents per share to be paid on 31 December 2012.
1 EBITDA is earnings before interest, tax, depreciation, amortisation and non-operating foreign exchange gains/(losses).
2 Underlying Group NPAT is net profit after tax adjusted for the impact of one-offs in the prior year ($314,000). These one-offs relate to Focus (DIY) Limited and include the debt recovery, inventory recovery and one-off costs.
Despite the continued tough global economic conditions, leading New Zealand shower and tapware designer Methven Limited [MVN], maintained profitability in the first half to deliver an interim dividend, similar to last year, of 4.5 cents per share. The partially imputed interim dividend will be paid on 31 December 2012.
According to Group CEO, Mr Rick Fala, despite the challenging conditions the business has been able to maintain profitability, primarily through continued tight cost control measures and improvements in operational efficiencies.
“Unfortunately, global market conditions continue to impact the Methven business, with the uplift in second quarter earnings not sufficient enough to offset the forecast weak first quarter,” Mr Fala said.
A key driver of the half year results has been the underperformance of the UK business. While Operating Revenue was up 1.0% from £5.97 million to £6.03 million, tighter margins and the increased investment in the UK sales team, which is yet to deliver a significant sales uplift, resulted in EBITDA1 falling from £0.5 million profit to £(0.2) million loss.
On the positive side, both the Australian and New Zealand businesses delivered an increase in EBITDA1, up 18.1% and 8.2% respectively.
Net Debt increased 10.5% from $17.4 million to $19.2 million, largely driven by short term tightening of supplier payment terms. This was at the lower end of guidance of $19 million to $21 million.
“Returning the UK business to profitability is a key priority. With water conservation a focus across UK, the team are involved in a number of water saving initiatives including the newly introduced national Water Label Scheme. A solid platform is now in place to launch the expanded 2013 Methven shower and tapware range which focuses on our water and energy saving Satinjet® technology,” Mr Fala said.
“In addition, the realisation of further operational efficiencies will assist in returning the UK business to positive EBITDA1 in the second half.”
Design and innovation continue to remain a focus and with over 40 new products launched in the first half, the business is expecting strong second half sales performance.
“Customer feedback on our new ranges is very positive and we are particularly encouraged by the new tapware ranges hitting in the Australian market, where Methven has a relatively low penetration in the tapware category,” Mr Fala said.
The business also remains committed to investment in new markets and channels with the increased investment in China delivering strong sales growth, up 116%, albeit off a small base.
“Alongside our continued expansion in China, we are exploring opportunities in areas suffering water and energy shortages. A recent contract win in South Africa for our Satinjet showers serves to highlight the potential opportunities for our proprietary technology around the globe.”
Maintaining cost control disciplines and further improvements to operational efficiency remain an important focus throughout the business and are expected to be a positive influence on the second half year result.
According to Methven Chairman Mr Phil Lough, despite the temporary increase in debt levels, the business is confident of generating positive cash flows and reducing debt levels in the second half, although it still remains imprudent to provide guidance.
“The Group’s solid financial position ensures we are still well within our bank covenants and debt facility limits. This has enabled the Directors to declare a partially imputed dividend of 4.5 cents per share to be paid on 31 December 2012,” said Mr Lough.
“The business continues to maintain profitability and provide solid returns to shareholders and we are pleased to have consistently delivered full and half year dividends since listing on the stock exchange in 2004.”
Methven remains committed to delivering a stronger second half performance by executing the current strategy.
“We remain committed to delivering improvements in our core markets through the roll out of award winning proprietary shower and tapware and a differentiated experiential brand and marketing strategy,” Mr Fala said.
For more company information, visit www.methven.com
A pioneer in bathroom and kitchen plumbing for over 125 years, Methven is New Zealand’s oldest and largest designer of shower and tapware to builders, plumbers and home renovators. Today, Methven is a world-class international business with our proprietary technology, shower systems and tapware ranges earning a reputation for innovation, high quality, and water and energy efficiency. Methven has won prestigious design awards worldwide for the innovative functionality and water and energy saving aspects of our products including the prestigious Red Dot and Good Design Awards.