Renovations Drive Dulux Profit Higher
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DuluxGroup has lifted interim dividend by a cent to 14 cents a share after lifting half year profit 9% to $79.2 million. But the market went right off the result as the day went on yesterday.
As a result, the shares which had risen to a day’s high of $8.20 in a falling market early on, retreated and dropped 2.2% to $7.87, a 33 cent turnaround in sentiment.
Investors seemingly ended up ignoring management’s expectation of another record full year profit when the 2017-18 books are ruled off on September 30.
Dulux managing director Patrick Houlihan reiterated the company’s expectation that full-year profit would exceed the $142.9 million it reported for 2017.
“Lead indicators for our key markets remain largely positive,” Mr Houlihan said in yesterday’s announcement.
“Our core existing home renovation markets, which account for approximately two thirds of DuluxGroup revenue, are expected to continue providing resilient, profitable growth.”
“Subject to economic conditions, and excluding non-recurring items, we expect that 2018 net profit after tax will be higher than the 2017 equivalent of $142.9 million.”
The higher payout and profit came off the back off a 4.2% rise in revenues to $918.1 million as the company continues to ride the dying embers of the home building and apartment construction boom.
The Australia and New Zealand business segments, which contributes around 70%7 of group earnings, saw a 5.7% rise in revenues thanks to sales growth and what the company said was effective management of raw material costs.
The Group result also included solid earnings growth in Selleys & Parchem ANZ, B&D Group and Lincoln Sentry, which collectively grew profit by 6.5%.
The ‘Other businesses’ segment was flat overall, with good contributions from Yates and PNG, along with profit on the sale of the China coatings business, offset by planned investment in the UK and Indonesia.
Corporate was favourable due to the gain on sale of the surplus Glen Waverley site, although this was partly offset by one-off costs, including start-up costs associated with the new Dulux Merrifield factory.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.