Covid Delta outbreak: Metroglass to take $10m hit to earnings, postpones dividend resumption

New Zealand lockdowns have resulted in considerable disruption, uncertainty, and product shortages, Metroglass said. Photo / Martin Sykes

Metro Performance Glass is forecasting a bigger hit from current lockdowns here and in Australia than last year and expects first-half earnings to be about $10 million below last year.

The company has postponed a resumption of dividends which had been anticipated to be declared alongside interim results due in November.

"The New Zealand lockdowns have resulted in considerable disruption, uncertainty, and product shortages across the domestic construction supply chain, which are expected to impact the industry for several months to come as manufacturers, distributors and builders restart and ramp back up," the company said in a market update.

Three of Metroglass' four New Zealand glass processing plants were closed from August 17 until September 8 while a fourth plant based in Auckland is currently preparing to safely recommence operations from Wednesday following Auckland's move into alert level 3 tomorrow morning.

The company's Auckland plant is the largest in the group and was closed for more than a month in a traditionally busy and profitable part of the year, Metroglass said.

Australian Glass Group's three processing plants are currently operating, and the business is achieving solid sales performance, it added.

"However varying state‐by‐state Covid‐19 shutdowns and restrictions are impacting the supply chain, labour availability/absenteeism and profitability.

"The financial impact of this period has been significantly greater than the April 2020 lockdown, and Group H1 Ebit is currently expected to be [approximately] $10m below last year. In addition to the closure period, the NZ business has faced input cost pressure in a more competitive market, and a lower NZ Government wage subsidy compared to last year."

The company has so far received $2.16m in August 2021 wage subsidies, compared to $6.49m for roughly the same number of staff in April 2020.

Metroglass' net debt has been reduced significantly in recent years and is expected to end the first half at a similar level to the same period last year, the company said.

Net debt was $47.7m as at September 30, 2020.

The company reported ebit of $12.8m for the first half of 2021, down 12 per cent on the previous corresponding period.

Metro Glass said the financial impacts of lockdowns were one‐off in nature.

"The construction pipelines in NZ and Australia continue to be strong looking forward and Auckland's move to alert level 3 this week is a positive step for the industry."

The company said today the decision to postpone dividend payments was disappointing.

"While the delay is disappointing, the board remains committed to delivering a conservative and sustainable dividend as soon as possible."