And it was also a more confident upgrade from paint and building products company, DuluxGroup (DLX), thanks to the gathering rebound in housing.
After reporting a relatively flat profit and lifting dividend for the year to September 30 yesterday, the company surprised the market somewhat with the confident forecast that all things being equal, 2014 profit will be higher than 2013’s.
"Lead market indicators have generally improved in Australia and remain positive in New Zealand," Dulux said.
"Subject to economic conditions, and excluding non-recurring items, we expect 2014 net profit after tax to be higher than the 2013 equivalent of $94.1 million."
CEO Patrick Houlihan later told a media conference that two thirds of DuluxGroup’s business is exposed to the home renovations market, and 16% to new housing.
"We’re seeing good indicators in residential home improvement," he said.
"In terms of new housing, we’re seeing green shoots in that regard."
Bigger companies such as Orica (ORI) and Incitec Pivot (IPL) were not as confident in their outlook statements in their 2012-13 profit reports earlier this week.
In fact they were positively cautious compared with Dulux and both didn’t even reference their own 2012-13 profit figure.
And yet investors weren’t impressed with Dulux and the shares dipped 0.6% to $5.19. That wasn’t too bad in yesterday’s 1.4% slide in the market.
DLX YTD – Dulux confident about 2014 after a solid 2012-13 and higher dividend.
But seeing they are up around 30% since July, perhaps that fall was not unexpected.
For the 12 months to September 30, Dulux earned a net profit of $76.92 million down 14% from the previous year’s figure of just over $89 million.
But that was figure included $15.1 million costs related to the drawn out Alesco acquisition and a $10.2 million impairment charge against its DGL Camel joint venture in China.
Excluding the non-recurring items, after tax profit was $94.1 million, up 18.2% over 2012’s of $79.6 million, and topped earlier guidance provided at the 2013 first half announcement.
Meanwhile, revenue surged $417 million or 39%, to $1.48 billion, thanks to extra sales from Alesco.
On a 12 month pro forma basis, Dulux said the Alesco businesses delivered earnings before interest and tax of $31.2 million, an increase of 3.7%, on flat sales in generally adverse markets. This result excludes Robinhood, which has been sold.
Dulux’s earnings also included a $15 million insurance payout on flood damage to its main manufacturing facility in 2011.
The group will pay a final dividend of 9.5c, (franked at 30%), up from the 7.5c a share final for 2011-12.
The higher final dividend brings total dividends for the year to 17.5c, up from 15.5c for the previous year.
In Australia and New Zealand, which account for more than 90% of DuluxGroup’s revenue, the company said it had seen improvement thanks to factors such as lower interest rates, better consumer confidence and rising house prices over the second half of the 2012-13 year.
DuluxGroup also expects continued strength in the New Zealand market, underpinned by the rebuilding of earthquake-hit Christchurch.
The NZ government has lifted the cost of that rebuild from $NZ30 billion to $NZ40 billion.
