Metroglass' Australian woes drag annual net profit down 69%

Net profit for the year ended March was $5 million, down from $16.3m the previous year. Photo / 123RF

Metro Performance Glass' annual profit plunged 69 per cent and operating earnings matched March's downgrade with the company putting the blame on "significant challenges" in Australia.

Net profit for the year ended March was $5 million, down from $16.3m the previous year – both the previous year's profit and the year before that also declined. It reported a profit of $20.5m in the 2016 financial year.

Operating profit before a $9.6m write-down of the value of Metroglass' Australian assets fell 18.4 per cent to $25.2m.

Metroglass' balance sheet is still carrying $146.4m of intangible assets, more than 95 per cent of it is goodwill.

"Progress has been made across all parts of the group this year and we are pleased with the operational improvements and stronger financial results achieved in New Zealand," says chief executive Simon Mander.

"The Australian business, AGG, had a disappointing year, taking longer than expected to recover from the significant operational changes we've made over the past 18 months," Mander says in a statement.

The New Zealand operations lifted earnings before interest and tax before significant items by 6 per cent to $31.1m while the Australian operations made a $4.8m ebit loss compared with a $3.2m ebit profit the previous year.

"We have a clear strategy and plan in place for AGG and, in the latter stages of the financial year, we improved service delivery in all three states, reduced reworks and achieved a more stable and engaged workforce," Mander says.

AGG operates in New South Wales, Victoria and Tasmania.

"These positive changes have resulted in a number of former customers already returning and we're focused on regaining their confidence and trust."

Revenue in Australia fell 9 per cent to $50.4m while New Zealand sales rose 2 per cent to $217.4m.

Metroglass says its changes in Australia include a major capital programme, a shift from domestic to international glass supply, moving the business' manufacturing and sales focus towards double glazing products and opening a manufacturing plant in Tasmania.

The company says the start-up of that factory, its seventh in Australia, met its first year financial goals, including breaking even on an ebit basis in the final quarter of 2019.

It also had operational problems in the other two states.

New Zealand fundamentals remain strong but Metroglass expects supply constraints and it expects Australian housing starts will decline further.

Metroglass is paying no dividends this year after paying 7.6 cents per share last year.

Mander says the company will provide preliminary guidance for the current year at its annual shareholders' meeting on July 26.

"While being acutely aware of the challenges ahead, Metroglass is firmly focused on rebuilding shareholder value through further improved performance in New Zealand and by executing its plan for stabilising and growing the Australian business," he says.

Metroglass shares ended yesterday at 40 cents and they have declined about 52 per cent in the past 12 months.