Tenon turns profitable on EBITDA basis as US housing recovers, aims to double earnings in 2014
Tenon [NZX: TEN], the wood mouldings company controlled by former Fletcher Challenge unit Rubicon, returned to profit on an earnings before interest, tax, depreciation and amortisation basis as the US housing market regathered momentum, and wants to more than double earnings in the coming financial year.
The company reported EBITDA of $5 million in the 12 months ended June 30, form an EBITDA-loss of $3 million a year earlier, and at the top of its guidance in May, Tenon said in a statement. The company narrowed its net loss to US$3 million from $9 million in 2012, and boosted sales 9 percent to US$364 million.
Tenon's trading performance is closely tied to demand in America's housing market, which is emerging from the devastation wreaked by the sub-prime mortgage debacle with US housing starts up 25 percent, sales up 26 percent and existing home prices up 16 percent in the period.
"The turnaround in the US housing market has given us confidence to target a doubling of EBITDA in the current 2014 financial year," chairman Luke Moriarty said. "Should we achieve that our shareholders can expect a further appreciation in our share price."
The stock was unchanged at $1.35 and has jumped 63 percent this year.
Tenon is looking to expand its banking facility to latch on to the lift in US housing activity, and expects to make an announcement in the "very near future," chief financial officer Adam White said. The company's net debt increased to US$49 million as at June 30 from US$39 million a year earlier.
The company is still looking at spreading its income streams away from North America, but has slowed its marketing to tap the China market as it looks to ride the recovery in US housing, it said.
The board didn't declare a dividend.