Methven caustiously optimistic

MICHAEL FOREMAN
Last updated 13:36 29/11/2013

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Listed showerware and tapware maker Methven has reported a net profit after tax of $2.8 million for the six months ended 30 September 2013.

The profit is a 21 per cent increase of over last year's corresponding half-year period.

Methven group CEO Rick Fala said the improved earnings reflected a turnaround in the business after several years of challenging market conditions because of the global financial crisis.

"We're cautiously optimistic that conditions in our core markets have stabilised and we're now focused on our innovative marketing activities to drive topline growth," Fala said.

Operating revenue fell slightly from the previous corresponding period, down 2 per cent from $50.3m to $49.4m, but Fala said revenue had grown in local-currency terms in all Methven's key markets.

"We were pleased with the steady revenue growth that all divisions achieved in their domestic markets during the first half," he said.

"Unfortunately currency movements, along with a drop in export sales to the Middle East and South Africa, led to lower operating revenues for the group."

Methven reported "significant items" consisting of $348,000 of costs relating to its acquisition of Chinese tapware manufacturer Invention Sanitary and foreign exchanges losses of $98,000.

Profit after tax would have been higher at $3.2m if the significant items were excluded, the company said.

Fala said the Invention Sanitary acquisition, which would be completed in June next year, would secure an important part of Methven's supply chain while adding upstream margin.

Methven chairman Phil Lough said the company had reduced its debt levels by 16 per cent in the first half of the year and with "solid cashflows" expected to continue through the second half, the company had declared an increased interim dividend of 5 cents a share, up from 4.5c in June.

Earlier this month Methven announced the appointment of David Banfield as its new group chief executive effective from January. Fala would defer his planned retirement date to December to assist the transition and would then remain involved as a non-executive director, the company said.

Methven shares were trading on the NZX at $1.47 at noon, down 0.68 per cent from their opening price of $1.48.

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