Methven profit up after plant acquisition
NZX-listed Methven has lifted annual profit 21 per cent, in line with guidance, after the acquisition of a Chinese manufacturing plant widened margins.
Profit rose to $5.69 million in the year ended March 31, from $4.71 million a year earlier. That was in line with its expectation for annual profit growth of between 15 per cent and 25 per cent. Sales slipped 0.4 per cent to $96.3 million, while earnings before interest, tax, depreciation and amortisation rose 12 per cent to $12.7 million.
At balance date the tap and shower maker and exporter’s debt increased to $22.75 million from $14.45 million a year earlier, after it finalised the purchase of its Chinese manufacturer, Methven Heshan, formerly Invention Sanitary.
At its annual meeting last June, chief executive David Banfield told shareholders that the Chinese acquisition would underpin Methven’s profit growth and boost its competitiveness by securing supply and doubling margins.
The company said debt levels were “comfortably within its banking covenant limits”.
Methven said it was “cautiously optimistic” about the future, and expects full-year profit growth of 15 per cent to 25 per cent with sales growth of 5 per cent as it benefits from the China acquisition. It will also look to reduce debt. The company said it was changing its balance date to June 30, so it could more readily predict sales and income.
In New Zealand, profit dropped 21 per cent to $3.04 million as sales slipped 1.6 per cent to $32.11 million.
Methven said the performance was below expectation as a key customer further reduced its stock holdings in the final quarter.
Across the Tasman, Methven increased profit from Australian operations by 23 per cent to $1.59 million, while sales rose 2.9 per cent to $36 million. The company raised prices in Australia to offset the decline in the Australian dollar against the United States currency.
The company narrowed its loss in the British market to $276,000 from a loss of $1.1 million a year earlier, as its sales increased 5.5 per cent to $23.2 million.
Profit in its China market increased 20 per cent to $72,000, while “expected revenue growth has not materialised” and sales slipped 3.5 per cent to $385,000.
The company closed its standalone Xiamen office, with back-office functions to be managed from its Methven Heshan operations.
Methven has also announced that Peter Stanes will end 11 years on the Methven board on July 15, to be replaced by Norah Barlow, former chief executive of Summerset Holdings. Methven boss Banfield will also join the board as a director.
The board declared a dividend of 4c a share.
Shares in Methven closed up 1c yesterday at $1.17.