Shower and tapware designer Methven affirmed its expectation for earnings growth on a constant currency basis in 2018 but said first-half profit won't rise due to planned investment.
Auckland-based Methven was projecting net profit on a constant currency basis to be 10 percent higher than the $5.8 million it posted in 2017, a period it described as "very disappointing".
Chief executive David Banfield told shareholders at today's annual meeting in Auckland that the company expects flat or slightly lower first-half earnings due to earmarking $579,000 for its "Fit 4 the Future" business transformation plan.
In the first quarter, ended September 30, profit rose 32 per cent on a constant currency basis, although tapware continued to underperform, Banfield said. Tapware sales are forecast to persist at current levels until Methven begins new activity in the third quarter of 2018 and starts selling new products in the fourth quarter of 2018.
"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. Competitors sourced cheaper products overseas and Methven's investment in New Zealand designed to drive top-line revenue failed to deliver expected growth in 2017, he said.
