Methven Releases Annual Results for FY11 Innovative Designs and Operational Efficiencies Key to Turnaround
Luxury shower and tapware designer Methven has today released its annual results for the year ending 31 March 2011. Key results for the Company include:
Group Financial Performance
· Group NPAT down 39.3% from $7.8m to $4.7m, after impact of providing for the loss of
· $2.0m relating to the UK customer, Focus (DIY) Limited
· Excluding impact of loss from this UK customer, Group NPAT down 13.7% from $7.8m to
· $6.7m
· Net Debt increased only 9.3% from $17.4m to $19.1m, guidance was an increase of 15-
· 20%
· Group Operating Revenue down 6.0% from $129.8m to $122.1m
· EBITDA down 13.4% from $16.7m to $14.5m, excluding impact of UK customer loss
Highlights
· Sales in Australia up 12.1% from A$36.6m to A$41.0m
· EBITDA in Australia up 62% from A$2.4m to A$3.8m
· Second prestigious Red Dot Award won, this time for Tahi Twin Lever tapware system
· Key management change in UK in November 2010
· Launched Methven brand at premium global trade show in Frankfurt, March 2011
· New computer system implemented in New Zealand; delivered on time, and, on budget
Dividend and Cash Flows
· Debt and cash flow forecast comply comfortably within banking covenants and headroom
· Partially imputed final dividend of 4.5 cps to be paid on 30 June 2011, down on June 2010 final dividend of 5.5 cps, to bring total dividend for the year to 10.0 cps (LY 11.00 cps)
Group CEO Rick Fala said the year had been a challenging one, compounded by the loss of the largest UK customer Focus (DIY) Limited entering into voluntary administration and the Christchurch earthquakes affecting domestic sales.
“We’ve suffered setbacks this year but we have learned from them, and, in particular are confident our strategies will return the UK to profit in the coming year,” Mr Fala said.
“Pleasingly our debt levels were better managed than forecast and we are well within our bank covenants and headroom, allowing us to pay a partially imputed final dividend of 4.5 cents per share.”
He said performance in Australia was pleasing with sales up 12 per cent and EBITDA up 62 per cent, and the rollout of new products - combined with Methven’s proven sales methodology - enabled the company to grow its market share.
While New Zealand performance was weaker, much was due to building and renovation activity holding at historic lows and the impact of the Christchurch earthquakes.
Mr Fala stated that the UK business had been expected to breakeven, but the loss of the largest UK customer, Focus (DIY) Limited, that went into voluntary administration, resulted in an eventual loss of £1 million.
The plan to turnaround the underperformance of Methven’s UK division commenced in earnest in October 2010 with Matthew Crichton, Chief Operations Officer for the Methven Group being seconded to the UK.
“Matt has built a successful operation in Australia creating the Methven brand from scratch. We saw the opportunity for him to deliver first hand those same learnings to our UK team - and also drive the unique culture of Methven that is based upon being designled,” said Mr Fala.
In addition the company appointed in November 2010 new UK CEO Steve Lee, the highly regarded and experienced former Chairman and CEO of The Bristan Group, the largest tapware company in the UK.
“In March 2011 in the UK we re-launched the Methven brand at the Ecobuild Kitchen and Bathroom trade show in London. We have also refreshed the Deva brand and rationalised our product range by 50 per cent. This combined with a reduction in the number of suppliers, will lead to an improved and more competitive range offering,” said Mr Fala.
He said the development of the luxury hotel market was also showing good results. The total number of hotel rooms fitted with Satinjet showers increased to more than 21,000 rooms worldwide, and, when combined with Jemflow technology, was a winning proposition.
There was a solid pipeline of potential European and Asian hotel quotes, and the impressive list of secured clients included the Intercontinental Hotel and Resorts, Crowne Plaza, JW Marriot, Sheraton Hotels & Resorts, Westin Hotels and Resorts, Hilton, the Grand Hyatt and Hyatt Regency.
“Methven is committed to its design-led strategy and we have continued our heavy investment in research and development, increasing spend by 50 per cent year on year,” said Mr Fala. “This paid off when we were rewarded with a second prestigious international Red Dot design award, this time for the Tahi Twin Lever tapware system.”
In the coming year the Company said it planned to launch three more Satinjet shower ranges and complementary tapware, a total of 59 new Methven branded products – giving the consumer more functional benefits, styling options and price points.
“The outlook for next year is a lot more promising as we expect to reap the benefits of the all the actions we commenced last year. Net Profit after tax is forecast to be in excess of $8.5 million – up more than 25% on last year before the one-off loss of the UK customer,” said Mr Fala.
“We are forecasting Australia will continue its strong growth in profitability, despite a softening in the market. Our focus will switch to delivering improved product benefits and increasing operational effectiveness.”
“In New Zealand performance is expected to be static until the Christchurch rebuild fully gets underway. We do expect the market to drop in the short term, but we will maintain our market share.”
“While the economic outlook remains challenging in the UK, our focus on rationalisation and executing our turnaround strategy will enable us to return a profit for 2012, thereby building a sustainable base for growth,” said Mr Fala.