The convoluted takeover battle for building products group Alesco late last year has bitten hard into the interim earnings of DuluxGroup, Australia’s major paint maker, with the company taking a $10 million write-off on the costs of the bid for the six months to March 31.
Despite that extra cost, which helped drop net profit 31% to $32.9 million for the half, Dulux will pay a slightly higher interim dividend of 8c a share, up half a cent (fully franked).
The shares edged up 11c, or more than 2%, to $4.59.
Dulux finally wore down Alesco late last year and completed the takeover at the start of this year.
The company said cost savings already identified at Alesco were running ahead of what was budgeted for in the bid.
Dulux said conditions were soft during the six-month period, and likely would remain so for the remainder of its fiscal year.
CEO Patrick Houlihan said the renovation sector, where the majority of its revenue comes from, was proving resilient to the downturn in the housing and construction markets, while the paint business, which represents about 40% of the company’s revenue, had recorded good residential sales and soft trade sales.
"The renovation, do-it-yourself sector is continuing to remain relatively resilient," Mr Houlihan said.
The group has forecast a full year profit of about $89 million.
Dulux still confident on earnings
News of the 5.2% rise in housing finance approvals should help ease some of the angst at Dulux about the softness of the home building sector.
And, the explosives and fertiliser maker Incitec Pivot will pay a higher dividend despite a 31% fall in first half earnings caused by the the impact of the high Australian dollar, but the company managed to ride out the downturn in commodity prices in the half which its resources sector clients who buy its explosives.
Incitec Pivot reported a net profit of $110.3 million in the six months to March 31, down from $139.8 million in the same period the previous year.
The company lifted interim dividend slightly to 3.4c a share, from 3.3c a share partly franked.
The larger fertiliser business saw a 19% fall in earnings due to the high Australian dollar and falling prices for the products around the world, according chief executive James Fazzino.
But earnings in the explosives business rose 7% despite the lower demand for explosives from miners.
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Mr Fazzino said in yesterday’s statement that "the result continues to support our strategy of investing in the explosives business, which will continue to be realised over the coming years as the Moranbah plant is fully commissioned and the Louisiana ammonia plant is constructed".
That plant will cost at least $US850 million.
Incitec Pivot’s $1 billion ammonium nitrate plant at Moranbah in central Queensland began production in 2012.
It also has plants in the US, Canada, Indonesia, Mexico, South America and Papua New Guinea.
IPL shares rose 10c, or more than 3%, to $2.93 yesterday.
News that the Australian dollar dipped below parity with the greenback helped soften the blow of the worse than expected result yesterday. On the face of it, IPL will be one of those companies to get some boost from a prolonged easing in the value of the dollar before the $US1 level.
