Methven expects revenue, profit growth this year after 2013 decline

Methven, the tapware maker which posted a 20 percent drop in profit last year, expects solid sales and profit growth in the current financial year. Its shares rose 2.3 percent.

"We are targeting solid sales and net profit after tax growth for the first half and full year of 2013-14," chairman Phil Lough says in a statement for delivery to the annual meeting in Auckland today.

"We are determined to build the revenue line back in Methven. That is our principal task and is what we will be reporting in the future."

Profit fell in the year ended March 31 as sales slumped 15 percent in a weaker Australian market and slipped 1.5 percent in New Zealand, while edging up just 0.9 percent in the UK.

The outlook is more upbeat this year, with an improved market outlook for New Zealand and improving returns from the UK offsetting tough Australian market conditions, the company said today.

Shares in Methven rose 3 cents to $1.33, reducing their decline so far this year to 5.1 percent.

The company is pursuing growth opportunities in China and emerging markets and expects growth through its innovative designs and greater marketing focus, it says.

In New Zealand, first-quarter sales are tracking ahead of last year, flowing through to improved earnings before interest, tax, depreciation and amortisation, chief executive Rick Fala says in notes for the annual meeting.

In Australia, sales are stable but margins have weakened as the market becomes more competitive, resulting in lower earnings, he says. The company is maintaining tight cost control and focusing on opportunities for growth in an attempt to turn around the sales decline and maintain earnings.

In the UK, first quarter sales are stable with improved margins and lower operating costs. The UK unit is expected to continue its modest top line and earnings growth, Mr Fala says.

In China, first quarter sales are up significantly with improved margins and a small increase in operating costs. Methven said yesterday it had agreed to buy its Chinese manufacturer, which should boost margins and profits.

Net debt, which jumped 48 percent to $17.2 million last year because of higher stock levels in Australia, is now back to normal and comfortable within bank covenants and facilities, the company says.

Methven is in the final stages of recruitment for a new chief executive with a proven track record and expertise in international marketing and brand development, to replace Mr Fala, who steps down on September 30, Mr Lough says.

(BusinessDesk)