Methven half year net profit rises 4pc

Bathroom products company Methven today reported a 4.1 per cent rise in its September half year net profit to $3.7 million.

Operating revenue increased 16.7 per cent to $34.7 million buoyed by surging sales from Methven Australia, up 59 per cent.

New Zealand sales were up 8 per cent in a "challenging market".

Managing director Rick Fala said the company had some revolutionary new designs and brands ready to roll in 2007.

Methven was in good shape and was on track to deliver a full year performance and profitability slightly ahead of last year, he said.

The company declared a 5.72 cents per share interim dividend to be paid on December 8. The dividend was up from 4.12cps at the same time last year.

The higher dividend was in line with Methven's policy of distributing 80 per cent of net profit.

The result was slightly better than guidance given to shareholders at the annual meeting in July.

Mr Fala said Methven had established a market in the United States and he expected sales to gain traction but at a lower rate than initially planned.

Earnings before interest, tax, depreciation and amortisation rose 3.7 per cent to $6.6m. That result was affected by the costs of setting up in the United States.

Methven said its Satinjet range really fired in its target market.

Sales were boosted by $1.1m from the one-off initiative by the New South Wales state government to subsidise water saving showerheads to consumers.

In New Zealand, Methven's focus was to maintain its market leading position and preserve margins in light of expected dampening in consumer spending and continuing cost pressures on raw materials.

New Zealand EBITDA was marginally down by 0.5 per cent to $6.2m.

In Europe, Methven's other emerging market, work was progressing to plan.

Methven had outsourced production to China and had the capacity to rapidly increase production.

Methven's New Zealand manufacturing operation was now more focused on higher value processes and products.

Mr Fala said cost pressures on raw materials, downstream components, fuel, freight and wages were likely to continue to affect margins in the second half.

"Longer term we expect the margin impact to be mitigated through better buying practices and market price adjustments."

Methven shares were unchanged on $1.70. They have traded between $1.19 and $1.90 over the last year.

- NZPA