Tapping into Oz boosts Methven

Strong sales in Australia helped Methven beat its own forecasts yesterday with a 7.1 per cent rise in full-year profit.

The company, which makes bathroom products such as tapware, showerware and valving, posted a net profit of $6.8 million for the year to March - outstripping a profit warning that earnings would be flat or below the previous year's $6.5 million.

Methven shares jumped 7c yesterday to close at $1.43, against a year-high of $1.49 and a low of $1.19.

Strong growth in the Australian shower and tapware division saw sales rise 26.7 per cent while local sales rose 3 per cent.

"It was not plain sailing and the strong finish in Australia and New Zealand was key to sustaining our track record of continuing, profitable growth," managing director Rick Fala said.

"While we achieved only a modest increase in profit we believe we have made good progress in positioning the business and building the branding, design, logistics and infrastructure platform required to drive growth in Australasia and the international export markets we are targeting, especially in the United States."

Fala said the US had become the company's prime export target. Methven had set up an office in New York and would focus on selling its Satinjet shower products to high-end plumbing boutiques and specialist retailers.

However, profits in the US were still at least a year away.

"We're encouraged by the initial customer and consumer responses but do not expect to deliver a profit until the second half of the 2007-2008 financial year after booking a small net loss in 2006-2007," said Fala.

Further increases in working capital and capital expenditure would be needed in the year ahead, but could be funded comfortably from operations, said Fala.

Methven plans to lift its dividend payment ratio to 80 per cent of profits from 60 per cent.

A fully tax paid dividend of 5.09c will be paid on June 30, bringing the total payout for the year to 9.21c.