MetroGlass posts 2.6% gain in first-half profit

MetroGlass posts 2.6% gain in first-half profit, in line with guidance, sees little-changed full-year result

By Jonathan Underhill

Nov. 20 (BusinessDesk) - Metro Performance Glass posted a 2.6 percent gain in first-half profit, in line with its guidance last month, and gave a forecast for a little changed full-year result.

Profit was $11.8 million in the six months ended Sept. 30, from $11.5 million a year earlier, the Auckland-based company said in a statement. Sales jumped 22 percent to $141.7 million, helped by a full six-month contribution from Australian Glass Group, acquired last year for A$43.1 million.

MetroGlass has about 55 percent of New Zealand's glass market but says competition and weaker-than-expected construction activity meant the company was "entering a period of more moderate growth". As a result, last month it announced a strategic review assisted by First NZ Capital, which is expected to be completed by March 2018. MetroGlass had geared up for stronger growth "but now in recognition of softer than expected conditions, steps have been taken to improve efficiency and capital expenditure plans have been revised," it said today.

Capex for 2018 is now expected to be $20 million, down from a previous estimate of $25 million, and annual capex over the next two years is expected to slow to a range of $10 million to $12 million.

"Planned capex over the next quarter will set MetroGlass up well for FY19 and this is in line with the board's commitment to prudent capital management," said chair Peter Griffiths, who took over from retiring chair John Goulter today.

Spending includes investment in its biggest plant at Highbrook, Auckland, to simplify operations and increase capacity to produce larger panels of glass, while it plans to invest more in its Australian operations.

Sales in the NZ commercial glazing business fell 6.1 percent to $25.2 million, while its NZ RetroFit doubleglazing business lifted sales by 14 percent to $11.6 million, it said. Australian Glass Group first-half sales rose 12 percent on a pro-forma basis, it said.

"The bones of the group are very solid," Griffiths said. The strategic review "is serving to ensure that the company’s business model is effective and efficient for the two countries in which we operate and that we prioritise the best opportunities to improve customer experience and financial returns to our shareholders."

The company said that in New Zealand, residential construction activity "is forecast to remain around current levels, with continuing and significant levels of migration, the current shortage of housing in Auckland, and the new government’s proposed KiwiBuild programme that aims to build 100,000 new homes over 10 years (50 percent of these in Auckland), underpinning demand for new homes." Still, there were "a number of supplyside constraints dampening growth. These include labour shortages and bottlenecks in the materials supply chain, as well as borrowing restrictions put in place by major lenders."

The company will pay an interim dividend of 3.6 cents a share, unchanged from a year earlier, on Jan. 23 with a record date of Jan. 9.

MetroGlass shares last traded at 88 cents and have dropped 59 percent in the past 12 months.

(BusinessDesk)

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