Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


China acquisition to underpin Methven profit growth

China acquisition to underpin Methven profit growth

By Suze Metherell

July 30 (BusinessDesk) - Methven is counting on its new Chinese manufacturer to secure its supply and grow the company's profitability as the tap and shower maker targets up to 25 percent earnings growth this year.

At its annual shareholder's meeting, new chief executive Daniel Banfield told investors the company's current performance wasn't in line "with our capability or expectations" and the addition of Methven Heshan, formerly Invention Sanitary, would increase the competitiveness of the Auckland-based bathroom fittings business. The company paid $10 million in cash and scrip for the Guandong-based manufacturer, which it said will starting adding US$2 million to net profit after tax from September.

"The big thing in terms of earnings growth is realising the potential of Methven Heshan. Confidence is really high that we're going to deliver US$2 million net profit per year," Banfield told BusinessDesk after the meeting. "It secures our supply chain. We've worked with Invention in the past for 10 years. They only supplied the Methven group and we saw an opportunity to buy that business, realise the margin ourselves, and get a more flexible supply chain."

Methven reported an 8.6 percent fall in annual profit to $4.7 million in the year ended March 31, its fifth year of profit decline according to its annual report, as retailers held smaller inventories and a strong New Zealand dollar crimped earnings. Banfield said the company expects to grow earnings between 15 percent and 25 percent this year, and needed to make "a number" of changes to boost long-term profitability, including "thinking like a market leader" and a clear business plan for the future.

"We were slow to return to investment after the global financial crisis and that did impact our earnings," Banfield said. "We've got a significant number of new products entering the market this year, and those new products will be the catalyst for growth."

Shares in the tap-maker rose 0.9 percent this year to $1.10 and have declined 23 percent this year, underperforming the NZX's Capital Index's 5.4 percent gain. The stock is rated an average of 'buy' according to three analysts surveyed by Reuters, with a median target price of $1.30.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Media: Julian Wilcox Leaves Māori TV

Māori Television has confirmed the resignation of Head of News and Production Julian Wilcox. Mr Maxwell acknowledged Mr Wilcox’s significant contribution to Māori Television since joining the organisation in 2004. More>>

ALSO:

Genetics: New Heat Tolerant Cow Developed

Hamilton, New Zealand-based Dairy Solutionz Ltd has led an expert genetics team to develop a new dairy cow breed conditioned to thrive in lower elevation tropical climates and achieve high milk production under heat stress. More>>

Fractals: Thousands More Business Cards Needed To Build Giant Sponge

New Zealand is taking part in a global event this weekend to build a Menger Sponge using 15 million business cards but local organisers say they are thousands of business cards short. More>>

Scoop Business: NZ Net Migration Rises To Annual Record In September

New Zealand’s annual net migration rose to a record in September, beating government forecasts, as the inflow was spurred by student arrivals from India and Kiwis returning home from Australia. More>>

ALSO:

Scoop Business: Fletcher To Close Its Christchurch Insulation Plant, Cut 29 Jobs

Fletcher Building, New Zealand’s largest listed company, will close its Christchurch insulation factory, as it consolidates its Tasman Insulations operations in a “highly competitive market”. More>>

ALSO:

Scoop Business: Novartis Adds Nine New Treatments Under Pharmac Deal

Novartis New Zealand, the local unit of the global pharmaceuticals firm, has added nine new treatments in a far-ranging agreement with government drug buying agency, Pharmac. More>>

ALSO:

Crown Accounts: English Wary On Tax Take, Could Threaten Surplus

Finance Minister Bill English is warning the tax take may come in below forecast in the current financial year, as figures released today confirm it was short by nearly $1 billion in the year to June 30 and English warned of the potential impact of slumping receipts from agricultural exports. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news