Methven shares drop as earnings growth stalls
Shares in Methven [NZX: MVN] fell after the tap-maker and distributer said annual profit growth won't be as big as earlier hoped, with slower trading in December and January.
The shares dropped 4.9 percent to $1.35, and have declined 10 percent over the past 52 weeks.
The Auckland-based company expects net profit to remain flat or rise up to 10 percent from $5.2 million a year earlier, it said in a statement. It had previously said it was "cautiously optimistic" on sustaining the 21 percent rise in its first half result.
"Methven experienced softer than expected trading in December and January in Australasia, partly due to key customer stock reduction programmes," it said in a statement.
"This appears to be one off in nature," said Matthew Goodson, managing director at Salt Funds Management. "If a large chain, most likely in Australia, decides to reduce their inventory for a couple of months then it will have an impact on your sales and profits."
The Auckland-based company distributes across New Zealand and Australia as well as to the UK. Its net income for the first half had risen to $2.8 million, as it continued to recover from tough economic conditions.
"Overall a positive trend for them continues, with strong construction here, in Australia and in the UK it should see strong growth," Goodson said.
The company expected its net debt of $14.4 million as of Sept. 30 to remain unchanged. It had reduced its net debt 25 percent in the first quarter, compared to the same period a year earlier, after it had jumped 48 percent to $17.2 million in 2012 because of high stock levels in Australia.