Methven taps into profit

Tight cost control and improvement in operating efficiency helped New Zealand shower and tapware designer Methven maintain profitability, albeit at a reduced level, in the six months ended September.

Group operating earnings were down 114.2% to $5.8 million, from $6.8 million in the previous corresponding period.

After-tax profit fell 27.4% from $3.2 million to $2.3 million and revenue was down 7% from $54.2 million to $50.3 million.

Net debt increased 10.5% in the period from $17.4 million to $19.2 million.

The interim dividend was unchanged at 4.5c per share.

Chief executive Rick Fala said global market conditions continued to affect the Methven business with the uplift in second-quarter earnings insufficient to offset a forecast weak first quarter.

A key driver of the half-year results was the United Kingdom division's underperformance.

On the positive side, the Australian and New Zealand businesses delivered increases in operating earnings, he said.

"Returning the UK business to profitability is a key priority. With water conservation a focus across UK, the team are involved in a number of water-saving initiatives, including the newly introduced national Water Label Scheme. A solid platform is now in place to launch the expanded 2013 Methven shower and tapware range which focuses on our water and energy-saving Satinjet technology," Mr Fala said.

Chairman Phil Lough said despite the temporary lift in debt levels, the business was confident of generating positive cash flows and trimming debt levels in the second half, although it still remained imprudent to provide guidance.