Methven profit slumps after top British customer fails

Methven, the tapware manufacturer, reported a 39 per cent slump in profit after taking a $2 million charge on the collapse of its biggest British client.

The Auckland-based company made a net profit of $4.7 million, or 7.1 cents per share, in the 12 months ended March 31, down from $7.6 million, or 11.7 cents, a year earlier.

The company said this month that earnings would be hit by the voluntary administration of UK hardware chain Focus (DIY), which accounted for 5 per cent of total revenue last year.

Read the company's Full Year results and outlook here.

"We've suffered setbacks this year, but we have learned from them, and in particular, are confident our strategies will return the UK to profit in the coming year," chief executive Rick Fala said in a statement.

The manufacturer was forced to downgrade its earnings forecast twice before the Focus failure, blaming weak trading across the Tasman and the Christchurch earthquake for falling revenue.

Methven's sales fell 6 per cent to $122.1 million in the year, with a 13 per cent decline in earnings before interest, tax, depreciation, amortisation and the Focus failure to $14.5 million.

The Australian unit boosted EBITDA 62 per cent to A$3.8 million, while the New Zealand section's earnings fell 4.6 per cent to $9.4 million.

The UK unit made a loss of 991,000 pounds, compared to a profit of 1.5 million pounds a year ago.

Methven's Fala was upbeat about the company's outlook, forecasting net profit of $8.5 million in the 2012 financial year, with strong growth in Australia and flat earnings in New Zealand. He said Methven will focus on returning the U.K. business to profitability through reducing expenditure.

The directors declared a partially imputed final dividend of 4.5 cents a share, down from last year's 5.5 cents, taking the total return for the year to 10 cents a share.

The stock fell 0.7 per cent to $1.41 in trading on Friday, and has dropped 18 per cent this year. Methven returned to the benchmark NZX 50 Index in March.