KEY POINTS:
Bathroom products maker Methven has reported a 7.9 per cent rise in net profit after tax to $7.3 million for the year to March 31.
The result was achieved on group operating revenue up 21 per cent to $70.4 million, the company said today.
A fully imputed final dividend of 5.69 cents per share is to be paid, following an interim dividend of 5.72c. Group earnings before interest, tax, depreciation and amortisation (Ebitda) were up 8.5 per cent to $13.4 million.
The company said it had faced margin pressure from unprecedented rises in the cost of raw material, and increased infrastructure and market development expenditure.
Managing director Rick Fala said Methven had a strong second half with growth and revenue momentum in Australasia, driven from offering a full range of Methven branded showers, tapware and valving products and strong consumer support for the Satinjet range.
Offshore sales accounted for 43 per cent of group operating revenue in the 2006-07 year and Methven's aim was to continue to build its core design, branding, supply, marketing and distribution capabilities to drive growth internationally.
At the same time it would work to consolidate its leadership in New Zealand, where it had 40 per cent market share, and sustain growth in Australia.
Methven's distribution start-up in the United States reported an operating loss of $970,000 in line with expectations and earlier advice.
"US consumer research on Satinjet, conducted in November 2006, is very encouraging but the priority remains to bed down an effective distribution, sales and marketing model that reaches through to retail and the consumer," Mr Fala said.
The unprecedented increases in raw material costs, particularly brass, had offset much of the savings from outsourcing in the 2006-07 year.
But the company was well positioned to benefit from further gains in 2007-08 from its global manufacturing outsourcing programme to long established partners in China, Mr Fala said.
As a US dollar net importer, Methven had benefited from the relative strength of the NZ currency, although that was partially offset by the impact of a high exchange rate against the Australian dollar on earnings in that currency.
In this country, Methven lifted sales 8.8 per cent to $40.5m, and Ebitda by 5.2 per cent to $12.3m.
In Australia shower and tapware sales rose 54 per cent to $23.7m, while Ebitda was up 174 per cent to $2.1m.
Mr Fala said the company's business model retained New Zealand as the design hothouse and test market with a manufacturing and production engineering capability to ensure speed to market of new proprietary products.
At the same time, the continued migration of Methven's mass manufacturing to world-class, cost effective partners who could rapidly upscale production and deliver direct to customers, was on schedule.
Methven shares closed at $2.26 yesterday, having ranged between $1.33 and $2.40 in the past year.
- NZPA
