Tenon sees no uplift in earnings until late 2013
BUSINESSDESK: Tenon, the NZX-listed company that sells wood mouldings in the US, is forecasting no uplift in earnings until late 2013 as the high New Zealand dollar and tepid American economic recovery slow sales.
The Auckland-based company counts as the US as its biggest market the US, but high unemployment and a downturn in the housing market, coupled with a high kiwi, have contributed to slowing sales.
"Given the considerable uncertainty that remains as to the movement of the NZD:USD cross rate and the timing of any recovery ... we will not be giving earnings guidance at this stage, other than to say that any short-term lift in Tenon's earnings as a result of market recovery is unlikely to be felt until the second half of fiscal 2013," chairman Luke Moriarty and chief operating office Tony Johnston say in the annual report.
The company's medium-term plan is for a staged entry into the Chinese market and a deepening of its presence in the Australian market as part of a broader strategy to end its sole dependence on the US housing market.
"Growth into Australia and China will eventually reduce our current single-market dependence on the US for our cashflow. Rebalancing our portfolios will take time, and the reality remains that despite best efforts in the very immediate term our earnings will remain reliant on recovery in the North American market."
Shares in Tenon are unchanged on 71 cents and have gained about 3% this year.