The chief executive of Metro Performance Glass says it is too early to tell how much business it might get out of the recent earthquakes but it hopes to be called up to repair some of Wellington's commercial buildings.
The glass-manufacturer announced a first half profit up 5 per cent today on the back of the strong local construction market and a gain from its Australian acquisition.
CEO Nigel Rigby said fortunately its Wellington manufacturing plant had been left unscathed in the wake of the major earthquakes last week.
Rigby said it hoped to pick up business from the quakes but it was too early to tell how much it would get.
"It's hard to say how much in the South Island - repairing buildings in Wellington - that's the stronger of the two."
Rigby said it would have to wait for building assessments to be done and agreement on remediation work before it stepped in although some security and safety glass replacements would go ahead in the meanwhile.
Net profit for the business rose to $11.5 million in the six months ended September 30, from $11m a year earlier, on a 23 per cent lift in revenue to $116.3m.
Rigby said revenue growth had been very strong especially in commercial buildings, retro-fitting existing houses with double-glazing and glass for new build houses.
New building consents continued to be strong in Auckland and higher property prices was also pushing people out of Auckland which was driving strong growth in the upper North Island.
Rigby said the biggest challenge for the next half of the year maintaining its high growth.
"I'm not sure we will grow 18 per cent in the next half."
He said the company was working on enhancing its Highbrook facility, built 18 months ago, to keep up with the growth and was also putting effort into training more glaziers in an industry that was seeing pockets of shortages.
In August, the company bought Australian Glass Group for A$43.1m, and revenue includes one month of trading from AGG, worth $4.6m.
Rigby said the acquisition reflects "our view that Metro Glass' core competencies in double glazing and high-performance glass position us well for the significant long-term opportunities identified in the Australian market" and he was pleased with the early progress AGG had made.
The company refinanced as part of its AGG acquisition, increasing gearing to 38.5 per cent from 26 per cent at the previous first half. Net interest-bearing debt rose 82 per cent to $95.4m at the end of the first half.
The board declared a 3.6 cent interim dividend, payable on January 23 with a January 9 record date, which chair John Goulter said reflected both the company's opportunities and its increased gearing level.
Construction markets in New Zealand have been "highly supportive", the company said, with construction activity and building consents continuing to increase in the first half.
North Island residential consents rose 25 per cent year-on-year, with an increasing proportion of residential consents issued in the North Island from the year earlier as consents declined in Canterbury.
Rigby said the company had invested in extra capacity in Auckland where the market is growing, and was making good progress at cutting processing costs.
Metro Glass's forward order book for commercial projects grew 60 per cent to $29.7m as at September 30, from $18.6m a year earlier, while the Retrofit double glazing business lifted revenue 29 per cent to $10m.
"The commercial and Retrofit businesses generally utilise a higher level of glazing resource than our traditional window manufacturer, merchant and retail businesses," Rigby said. "Therefore with their expansion, Metro Glass' glazing costs increased in the period both in absolute dollar terms and as a percentage of revenue. The increased costs primarily related to increased activity levels, however our glazing infrastructure and management team was also strengthened to prepare us for future growth."
The shares, which listed at $1.70 on the NZX in 2014, last traded at $2.15, and have gained 25 per cent this year. The stock is rated an average 'buy', according to five analyst recommendations compiled by Reuters, with a median target price of $2.20.