Metro Performance Glass lowers FY guidance, suspends dividends to bring down debt
By Rebecca Howard
Nov. 26 (BusinessDesk) - Metro Performance Glass reported a 22 percent drop in half-year net profit, lowered its full-year guidance and said it won't be paying any dividends as it struggles to turn around its Australian business.
The company provided no further details of a new competitor looking to build a new glass processing plant near Hamilton that it alerted the market of earlier this month.
New Zealand's biggest glass processor said its half-year net profit in the six months to Sept. 30 was $9.1 million versus $11.8 million a year earlier. Revenue was down 1 percent at $140.5 million while earnings before interest and taxation were down 18 percent at $15.5 million.
The result was impacted by poor trading results in Australia, it said.
Metro Glass said its New Zealand business - with the exception of Canterbury - remains supported by elevated levels of residential and non-residential construction and revenue was 1 percent higher at $113 million.
The Australian business, Australian Glass Group, remains challenging, it said. Revenue was down 7.1 percent and ebit was a loss of $1.3 million versus earnings of $2.6 million a year earlier.
"The market is supportive and the recent capital investment programme is showing promise on lifting production capacity and improving manufacturing efficiency. However, it is taking longer than originally planned to reset AGG’s operations, people and culture. This has impacted its year-to-date financial performance and highlighted further capability gaps we are working to address," said chairman Peter Griffiths.
"We are focused on stabilising AGG’s performance in the second half of the year and returning the business to profitable growth in FY20," said Griffiths.
Given the challenges in Australia, it now expects group ebit of around $28 million, down from the guidance it gave at its annual general meeting when it said ebit would be at the lower end of its target range of $30million-$33 million.
The board has also reviewed the group’s leverage and dividend policy against its current operating performance, its longterm strategy, the uncertain future competitive landscape, and expectations of how the Australasian building cycles could evolve in the coming years, said Griffiths.
"As a result, it will declare no further dividends until the group’s leverage ratio, as measured by net debt to rolling 12month ebitda, is reduced to approximately 1.5 times. At 30 September 2018, this ratio was 2.3 times," it said. Net debt stood at $95.2 million.
The stock last traded at 53 cents and is down 44 percent over the past 12 months.
The shares plunged 24 percent earlier this month after it reported on its expected new rival's plans to have its new Hamilton plant coming on stream in mid-2020.