Methven optimistic despite profit fall

Last updated 13:33 30/07/2014

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The outlook for listed shower and tapware company Methven remains positive, chairman Phil Lough says.

Lough told shareholders at the company's annual meeting in Auckland today that the underlying health of the business was sound, even though profit fell 8.6 per cent from $5.2 million to $4.7m in the past financial year.

"The business remains profitable and financially sound and we are confident that we will continue to pay sustainable dividends," he said.

Group chief executive David Banfield, who replaced Rick Fala in January, said Methven's performance was not in line with its capability or expectations, but actions were under way to address this.

He said the recent purchase of Chinese tapware manufacturer Invention Sanitary, renamed Methven Heshan, would enhance Methven's cost competitiveness, provide it with a more flexible supply chain and create an additional manufacturing base in China.

"Confidence remains high" in a forecast that Heshan would contribute US$2m ($2.35m) a year in incremental net profit from September.

Methven was committed to the final phase of investment in a New Zealand-manufactured "breakthrough" showering system that would be launched early next year, Banfield said.

"We are aware of the importance of translating technology and product advantages into profitable top-line sales growth," he said. "This is our absolute focus."

Banfield said that aside from Methven Heshan's contribution, overall revenue and earnings growth were expected to be modest in the 2015 financial year.

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