Bigger dip for Methven

The tapware maker's profits have fallen. Photo / Thinkstock

Methven, the tapware maker whose board agreed to link directors' fee increases to earnings growth, reported a worse-than-expected 27 per cent drop in first-half profit on its unprofitable British operation.

Net profit fell to $2.3 million, or 3.5c per share, in the six months ended September 30, from $3.2 million, or 4.8c, a year earlier, the Auckland-based company said. The company had forecast a 25 per cent decline in September.

Sales fell 7.2 per cent to $50.3 million.

"The 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," chief executive Rick Fala said.

"Returning the UK business to profitability is a key priority."

Methven's board declared an interim dividend of 4.5c per share.

Earnings before interest, tax, depreciation and amortisation in the New Zealand unit rose 8.2 per cent to $4.3 million, while Australian earnings climbed 18 per cent to A$1.6 million.

The UK unit posted an ebitda loss of £184,000. Methven's British management team formalised a restructuring plan last month to address earnings in the first-half to return the unit to profit. The restructuring is expected to cost $270,000.

The company didn't forecast annual earnings, saying "with continued global market uncertainty it still remains imprudent to provide guidance on the level of growth we might achieve".

Shares in the company closed up 7c yesterday at $1.42.