It’s ‘back to basics’ for Metro Performance Glass

Metro Performance Glass said earnings will be relatively unchanged this year as the company beds in its “back to basics” strategy.

Earlier the company presented the outcome of a strategic review and said it is shifting from “expansion and diversification, to optimisation and enhancement of our i nternal capability to execute,” it said.

What that means “is we have a mindset of back to basics, a real focus on control and discipline through our plants and glaziers, and the market plateauing [in New Zealand] gives us the breathing space to do that,” chief financial officer John Fraser Mackenzie said. Earlier the company said profit was $16.3 million, or 8.8 cents a share, for the 12 months to March 31 versus $19.4m, or 10.5 cents a share, in the prior period. That was in line with guidance it gave in April. Sales rose 10 per cent to $268.3m, including 12 months of trading from Australian Glass Group. Earnings before interest and tax, before significant items, were $30.9m versus $33.9m in the prior period.

For the current financial year, it is targeting group ebit of between $30m and $33m, capital expenditure of about $10m and debt repayment of between $7m and $10m. The company also expects to maintain its current dividend policy, it said.

Fraser Mackenzie said the company hasn’t previously given guidance this early in the year and so “we are taking a conserva- tive approach”. The company expects Australian revenue to grow and New Zealand to remain broadly flat in the year.

As a result, any growth will come from the Australian top line and profitability and efficiency improvements in New Zealand. However, “it will be offset by some headwinds, which we see coming around wages,” as minimum wages lift.

“We are anticipating the beginning of a step up in wages in general,” he said, adding that another headwind was rising fuel costs, particularly in Auckland but more broadly at a national level.

Earlier this year, Auckland Council voted 15-2 in favour of a regional fuel tax to partially fund the city’s transport needs over the coming decade.

Group gearing was at 37 per cent as at March 31, versus 37.6 per cent on the same date last year. The stock traded up 7.3 per cent at 88 cents after the release. —