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Reliance smashed on FY20 profit downgrade

by Xavier Belbin (2020-03-25)

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Reliance Worldwide's share price has plummeted by more than a quarter after the manufacturer of plumbing fittings downgraded its full-year guidance and announced its first-half profit fell by 23.8 per cent.

The Melbourne-headquartered firm said it made $50.1 million in profit for the six months to December 31, with revenue up 4.6 per cent to $569. If you have any queries regarding where by and how to use architects, you can get in touch with us at our site. 3 million, compared with the same period in 2018.

RWC said it now expects to earn full-year profit of $140 million to $150 million, compared with prior guidance of $150 million to $165 million.

Reliance Worldwide shares closed on Monday down 26.5 per cent to a six-month low of $3.42.

"The financial performance for the period was lower than plan," Reliance Worldwide said in a statement.

"While we had flagged softness and uncertainty in some markets, ultimately most markets were weaker than expected and consequently sales growth was lower than projected."

Reported sales in the Americas grew by 7.0 per cent, missing internal growth targets as US remodelling activity slowed and RWC deferred sales promotions.

In Australia, it kept sales flat despite new housing starts being down 21.5 per cent for 12 months that finished September 30, RWC said.

RWC managing director Health Sharp said company reduced manufacturing volumes due to the lower sales activity, helping boost cash flow from operations by 163 per cent to $112.8 million and enabling the company to increase its interim dividend from 4.0 cents to 4.5 cents.

Mr Sharp said that some of RWC's new products outside of its core business of plastic and brass push-to-connect plumbing systems - such as its ultrasonic home water monitor - had ramped up at a lower rate than anticipated, and it was looking at alternative ways to commercialise new products.

"The fundamentals of the RWC business remain strong," Mr Sharp told analysts on a conference call.

"Our core business in our major markets in the UK, USA and Australia are solid."

Reliance said it planned to close a manufacturing plant in Tennessee and consolidate US manufacturing in Alabama at a cost of US$4 million.

The company said it was monitoring the effect on COVID-19 coronavirus would have on its supply chain but so far sees a minimal short-term impact.

RELIANCE WORLDWISE PROFITS DROP

* Net sales in the six months to December 31 up 4.6pct to $569.3m, compared to the same period in 2018

* Reported net profit after tax down 23.8pct to $50.1m

* Interim dividend per share of 4.5 cents per share, compared with 4.0 cents a year ago.



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