UK result slashes Methven’s profit

SHOWER and tapware maker Methven has reported a 27.4 per cent drop in net profit for the six months to September 30, as tough conditions in the UK market continue to have an impact.

Reported net profit after tax for the period was $2.3 million, down from $3.2m at the same time last year. Group operating revenue fell 7.2 per cent to $50.3m, from $54.2m.

Despite the challenging conditions, the business was able to maintain profitability through tight cost-control measures and improvements in operational efficiencies, chief executive Rick Fala said.

‘‘Unfortunately, global market conditions continue to impact the Methven business, with the uplift in second-quarter earnings not sufficient enough to offset the forecast weak first quarter,’’ he said.

A key driver of the results was the underperformance of the UK business, the company said.

While operating revenue was up 1 per cent from £5.97m (NZ$11.6m) to £6.03m, tighter margins and an increased investment in the UK sales team that has yet to deliver a lift resulted in ebitda (earnings before interest, taxation, depreciation and amortisation) falling from £0.5m profit to £0.2m loss.

But both the Australian and New Zealand businesses delivered an increase in ebitda, 18.1 per cent and 8.2 per cent respectively.

Net debt increased 10.5 per cent from $17.4m to $19.2m, largely driven by short-term tightening of supplier payment terms. Returning the UK business to profitability was a priority, Fala said.