Plumbing supplier Crane Group has slashed interim dividend by nearly 50% after profit fell 47% in the six months to December.
The company told the ASX yesterday that shareholders would receive a payment of 18 cents fully franked, down from 35 cents fully franked in the first half of 2009.
Crane says that for the full year it expecting earnings to be down 35% from the 2008-09 outcome of $56 million.
While it expects second half EBIT to be "higher that recorded in the previous corresponding period" "net profit after tax, before significant items for the full year will be down approximately 35% compared with last year."
Crane Group posted a net profit for the half year to December 31 of $15.871 million, down from $30.112 million in the prior corresponding half.
Net profit before significant items was also lower at $17.958 million.
The company said the guidance was in line with that given at the AGM last October, and yet the market reacted as if it was new news.
The company’s shares lost almost 8% at one stage yesterday before closing down 4.9%, or 46 cents, at $8.82.
"As previously announced, Crane Group’s first half performance was impacted by subdued market conditions in its Pipelines and New Zealand Trade Distribution businesses.
"This was partially offset by cost efficiency gains across all of its businesses," the company said.
Crane Group Managing Director, Greg Sedgwick said in the statement the continued focus on cash generation and tight management of costs had enabled the Group to weather the difficult market conditions experienced during the half year.
“Particularly pleasing was the continued improvement in the performance of Tradelink,” he said.
Tradelink is the hardware (especially plumbing) supplies group that market touts say Wesfarmers wants to inject into Bunnings as a way of keeping it away from the new hardware business of Woolworths.
Mr. Sedgwick said: “Over the past six months the Group has consolidated and built further upon the efficiency gains realised in FY09.
"This coupled with continued strengthening of the company’s balance sheet, means that Crane Group remains well prepared to benefit from improvements in market conditions.”
Revenue for the six months ended 31 December, 2009 was $933 million, down 20% on last year.
Segment Earnings of $34.2 million were down 46% compared with the same period last year, with earnings before interest, tax and significant items (EBIT) down 47% and equity accounted earnings down 38% on last year.
Net profit after tax, before significant items of $18.0 million, was down 46% on the same period last year.
Net debt at 31 December, 2009 was $188 million, a decrease of $29 million since 30 June, 2009.
The company said lower interest and tax payments and the strong segment cash flow mentioned above were the key contributors to the debt reduction.
"Gearing of 22.4% (measured as net debt to net debt plus equity) continues to track below Crane Group’s target range of 30% to 40%, providing capacity to take advantage of future growth opportunities as they arise. Net financing costs for the period were $9.7 million, down 45% on the corresponding period last year."
Industrial equipment group, Tutt Bryant Group confirmed an earnings warning issued last month and yesterday revealed a 48.% fall in nine month earnings to December 31.
The company is 70% owned by Singapore interests and yesterday’s release was made after the parent released its figures.
Net profit for the nine months ended December 31 fell to $6.7 million, from $13.1 million in the previous corresponding period, after a 30% fall in revenue.
Tutt Bryant says it expects to post a fiscal 2010 net profit of between $7.5 million and $9.0 million, excluding any foreign exchange gains and losses.
The group’s fiscal 2009 statutory net profit was $14.21 million, marking an annual decline of 46.5% after foreign exchange impacts.
"As announced on 28 January, the Company now expects to record revenues for the Full Year 2010 of between $240 – $250 million.
"However, despite the decline in sales revenue, TBG’s balance sheet remains strong.
"The Company’s net debt to equity ratio was 26 per cent (unaudited) at 31 December 2009, cash flow was healthy and operating expenses were reduced and continue to be closely managed."
The shares were untraded yesterday at 55 cents.
