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Positive Earnings Growth as Methven invests for the future

Positive Earnings Growth as Methven invests for the future


New Zealand’s leading shower and tapware designer Methven Ltd (MVN) today reported a 20.9% increase in net profit after tax (NPAT) over the previous year and on a like-for-like currency basis, up 22.6%. Methven Chairman Phil Lough commented that “the result was in line with previously announced earnings guidance and was encouraging, given the significant investments made during the year designed to drive future top-line growth.”

Group Net debt was reported to be higher than desired, increasing 57.5% to $22.8 million, the result of the Methven Heshan acquisition, higher than targeted inventory, and the capital investment for the future. Mr Lough highlighted “that despite the higher debt level, the Company remained comfortably within its banking covenant limits.”

The Directors and Management remain cautiously optimistic of future outlook and as such, the Directors were pleased to declare a fully imputed final dividend of 4.0 cents per share payable on 30 June 2015.

The Group reported solid performances in the UK and Australian markets, and the acquisition of premium tapware manufacturer Invention Sanitary, now Methven Heshan, contributed earnings from the second half year in line with expectations. The NZ market performance had been below expectation, partly impacted by a key customer further reducing their stock holdings in the last quarter.

Reported Group Sales revenue of $96.3 million was down 0.4% ($0.4 million) on the prior year but on a constant currency basis, was up 0.7%.

Group CEO David Banfield explained “During the course of the last year we invested $3.9 million in future-focused projects such as the AioTM range development and market launch, digital capability, and putting in place new capability to augment existing skills of the team.“ The incremental investment comprised around $1.6 million expensed during the year and

$2.3 million in capital expenditure.

On the 12th March 2015, Methven launched its new patented shower spray technology, Aurajet®, and industry-first Ecobrass (lead and heavy metal free) tapware range globally. Mr Banfield said “The range saw an excellent trade and consumer response at international launch events held at premier locations in NZ, Australia, UK and China attracting a high profile audience of leading designers, specifiers and customers.”

He added “In the shower market there are five globally significant spray technologies and now with ‘Aurajet’ (as well as Satinjet), Methven owns global IP in two of those five. The task is now to convert our technological lead into profitable growth.”

The Group advised it was changing its balance date with immediate effect, with a 15 month transition period commencing 1 April 2015 and ending 30 June 2016. This is expected to help improve forecast accuracy and predictability of results.

Mr Banfield went on to say that that there was still much work to do to deliver the aims of long term profitable growth and becoming a truly world class business. He said “We are cautiously optimistic that the work undertaken this year, along with planned activity over the coming year, will help us deliver that goal.”

The Group is targeting revenue growth of 5% or above, NPAT growth of 15-25% and Net debt reduction for the year ending 30 June 2016.

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