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 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, down from $54.2m.
Despite the challenging conditions, the business was able to maintain profitability through tight cost control measures and improvements in operational efficiencies, CEO 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 ($11.6m) to £6.03m, tighter margins and an increased investment in the UK sales team which has yet to deliver an uplift resulted in ebitda (earnings before interest, taxation, depreciation and amortisation) falling from £0.5m profit to £0.2m loss.
On the positive side, both the Australian and New Zealand businesses delivered an increase in ebitda, up 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, the company said.
Returning the UK business to profitability was a key priority, Fala said.
"With water conservation a focus across the UK, the team are involved in a number of water saving initiatives including the newly introduced national Water Label Scheme. A solid platform is now in place to launch the expanded 2013 Methven shower and tapware range which focuses on our water and energy saving Satinjet technology," he said.
Methven will deliver an interim dividend of 4.5 cents per share, similar to last year. The partially imputed dividend will be paid on December 31.