Methven Group beat its forecasts yesterday, when it reported an operating profitof $8.5 million for the six months ended September, down 11.5% from $9.6 million reported in the previous corresponding period.
Net debt for the bathroom product manufacturer fell in the period by 47.4% from$35 million to $18.3 million, better than the 30% forecast.
A fully imputed interim dividend of 5.5c per share willbe paid, the same as the final dividend.
Chairman Phil Lough said Methven had achieved creditable group profitability forthe interim period.
"The stronger-than-forecast performance in the first half gives us confidence that out strategies are working.
"We have tactical plans in place and a strategy of diversification of geographic markets, channels and ranges to enable us to ride out the current economic downturn and be in a strong position to accelerate growth as we see the recovery emerging."
The interim result was based on operating revenue of $68.1 million, down 5.1% from $71.8 million.
Methven shares rose 7cin trading yesterday.
Craigs Investment Partners broker Peter McIntyre said that the rise reflected the reduction in debt by the company.
"The profit is down but the company is paying less in interest costs. That's always a good thing.
"Paying down debt is as good as increasing sales these days," he said.
Mr Lough said the results reflected a resilient renovation sector in New Zealand, growth in tapware and valving sales in Australia, margin pressure in the depressed United Kingdom market and a further significant reduction in United States losses.
Chief executive Rick Fala said full year net profit guidance provided in July remained unchanged but net debt was expected to improve further on the guidance level.
Methven New Zealand was expected to continue to perform well against the second half in 2008-09, helped by a resilient renovation market, strong merchant support and introduction of new products.
The group was targeting strong growth in Australian profitability, based on increased top-line sales, underpinned by the comparative strength of the Australian economy.
The United Kingdom market was forecast to be down markedly on the second half of last year because of continued pressure on margins in a severely depressed market, he said.
Methven had also forecast the potential loss of key DIY customers, as they moved to sourcing tapware directly from Chinese manufacturers.
The group was not cutting back on strategic innovation, despite firm cost controls, he said.
