$ 10.7m Methven stake — Lindsay keen to help, not take over

Brendan Lindsay has no plans to take over Methven, after buying a 13.37 per cent stake for $ 10.7 million in April, but would like greater involvement with the NZX- li sted tap and showerware company.

Lindsay has made several investments after selling the company he founded — Sistema — to America’s Newell for $ 660m last year.

To date, the Methven stake is the most visible. “We see Methven as an extremely good company,” he says.

“The problem is that Methven is probably a bit overvalued because of its dividend payment, but we feel that it needs money invested into the business to grow it.

“Because of the high dividend payout, it’s difficult to get that reinvestment but I think that they have a very capable board and a very capable management team.

“We would like to help out in some way, or in some form. Are we looking at the moment at some sort of takeover? The answer to that is no,” says Lindsay.

“But we see it as a long term investment where we can add some value.”

Lindsay says management has been receptive to suggestions. “But we would like to get a bit more involved as time wears on,” he says.

In August, Methven reported a net profit of $ 5.8m, down 24.5 per cent on the previous year.

At the time, group chief executive David Banfield said it had been a disappointing year, with top- and bottom- line performance below its expectations.

“We intend to invest in our business model transformation plan named Fit 4 the Future, which i s expected to take t wo years to implement,” he said then.

The company’s share price has been soft over the past year. Methven shares closed yesterday at $ 1.01, down almost 20 per cent over the past 12 months.

Methven’s market capitalisation is $ 74.2m.

At this week’s annual meeting, Banfield said the company’s first quarter profit rose by 32 per cent on a constant currency basis, although tapware continued to underperform.

Tapware sales are forecast to persist at current levels until Methven begins new activity in the third quarter of next year, and starts selling new products in the following quarter.

“Despite there being a number of one- off impacts in the year, we recognise that tapware performance across Australia and New Zealand was poor and that our focus on showering has left room for private label and smaller brands to win some share from us in the tapware market,” Banfield said.