CORRECT: Methven lifts 1H profit 3.4% on cost-cuts, lower tax bill

Methven, the NZX-listed tap and shower manufacturer and exporter, lifted first-half profit 3.4 percent as lower costs and a smaller tax bill offset a slip in sales, and expects annual earnings to be at the top end of guidance.

Profit rose to $2.9 million in the six months ended Sept. 30, from $2.8 million a year earlier, the Auckland-based company said in a statement. Sales fell 1.4 percent to $48.8 million, while cost of sales reduced 0.5 percent to $27.7 million, and its income tax expense shrank 12 percent to $1.3 million.

Methven reported an 8.6 percent fall in annual profit to $4.7 million in the year ended March 31, its fifth year of profit decline according to its annual report, as retailers held smaller inventories and a strong New Zealand dollar crimped earnings.

The company is looking to lift annual profit between 15 percent and 25 percent this year, and newly appointed chief executive David Banfield said the first-half results "suggest Methven will finish the year at the higher end of previously stated net profit after tax guidance."

Part of the plan has been the acquisition of its Chinese manufacturer, Methven Heshan, formerly Invention Sanitary, to secure its supply. The company paid $10 million in cash and scrip for the Guandong-based manufacturer, and today said it is on track to exceed US$2 million in annualised profit. As a result of the acquisition, the company increased its net debt 38 percent from a year earlier, to $19.9 million.

The board declared a 4 cent per share dividend, with a record date of Dec. 12 to be payable on Dec. 31.

Shares of Methven were unchanged at $1.20 and have fallen 15 percent since the start of the year.