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Metro Glass shares hit new low as investors unsure

Metro Glass shares hit new low as investors unsure over management

By Paul McBeth

Oct. 2 (BusinessDesk) - Metro Performance Glass shares dropped to a new low as investors continue to weigh up the management team's ability to deliver earnings growth.

The stock fell as low as 96 cents and was recently down 2 percent to 98 cents. The share price has almost halved this year, lagging behind a 15 percent gain on the benchmark S&P/NZX 50 index over the same period, and the stock is rated an average 'hold' based on five recommendations compiled by Reuters.

Metro Glass's shares took a tumble in February when the company warned dwindling work in Canterbury and Wellington would weigh on annual earnings, followed by a second steep drop in August on a flat outlook for the first half, despite the contribution from its Australian acquisition.

Sam Trethewey, a portfolio manager at Milford Asset Management which has 6.8 percent stake in Metro Glass, said the company has struggled to meet investors' expectations for earnings growth and that gross margins - a key area of disappointment - was "not quite up to standard" reflecting inefficiencies in the business.

"There's a fair bit of uncertainty reflected in the share price on the management issue," Trethewey said. Milford raised the question of management's performance at the company's annual meeting in August, and "they've acknowledged that pressure and are looking to deliver, but there is still execution risk."

Chair John Goulter told shareholders at the meeting the firm anticipated better earnings in the 2018 financial year, although that's dependent on market conditions. The company will report first-half earnings in November.

Metro Glass floated on the NZX in mid-2014, selling shares at $1.70 apiece in an initial public offering to raise $244.2 million, the bulk of which went to its former private equity owners Crescent Capital and Anchorage Capital.

(BusinessDesk)

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