KEY POINTS:
Bathroom fittings manufacturer Methven expects overseas operations to insulate it against tough domestic conditions over the next year.
The company yesterday announced a 27.7 per cent increase in profit to $9.8 million.
The result was achieved on the back of strong growth in Australian shower and tapware sales,
combined with seven months' trading contribution from recently acquired British-based Deva, the company said.
Methven shares jumped 21c to close at $1.71 yesterday.
Total group operating revenue for the year to the end of March was up 63 per cent to $114.8 million, with earnings before interest, tax, depreciation and amortisation (ebitda) up 41 per cent to $18.9 million.
Methven New Zealand ebitda rose 3.6 per cent to $12.7 million and domestic sales were up 2.3 per cent to $41.4 million.
Chief executive Rick Fala said while New Zealand was the biggest single source of revenue, 63 per cent came from overseas markets.
"Over the medium term it is the most significant contributor of profit but we would expect that to change quite quickly."
Bathroom renovation provided the bulk of sales in New Zealand.
"People are pausing but we don't think that will last for the rest of this year."
Methven would introduce its mid-range Deva products over the year.
Australian shower and tapware division (ebitda) was up 70.3 per cent to $3.5 million, with sales up 21.6 per cent to $27.3 million but Fala predicted flat to softening conditions.
The British acquisition of Deva was completed in September, contributing revenue of $37.3 million and ebitda of $5.1 million, slightly ahead of budget despite a market downturn, Methven said.
A fully imputed final dividend of 6c per share is to be paid, bringing the total dividend for the year to 11.7c.
The dividend was in line with policy to maintain the payment at or above previous levels while also enabling reasonable reductions in borrowings over the medium term following the $59 million acquisition of Deva, the company said.
Methven said it expected to continue to achieve earnings growth in 2008-09 through the contribution of a full year's trading from the British business.
"The UK market is extremely tough - despite the headwind of the last six months the team was able to perform slightly ahead of target."
During the coming year it would get the full benefit of selling its satinjet shower range into that market.
Deva's marketing network has also been extended to the Middle East, with a new sales office opening in mid-2008 in Dubai, following success in securing US$1.2 million ($1.52 million) in initial orders to supply tapware to a development project.
Fala said in the United States a full year loss of $1.2 million was in line with budget with the impact of marketing costs. Methven was now concentrating on the West Coast.
- NZPA