Dulux (DLX) has again told shareholders they can expect a lift in earnings for the current financial year.
The company forecast higher earnings with its 2013-14 profit statement five weeks ago and yesterday’s annual meeting was told an even stronger result was expected for 2014-15.
And more of that improvement will come from the home renovation market.
Chief executive Patrick Houlihan told shareholders Dulux was more confident about the market for improving existing homes rather than building new ones.
"This large and profitable segment has proven to be quite resilient, and this is expected to continue, underpinned by high levels of home ownership, low interest rates and high house prices," he said.
Mr Houlihan said the housing construction market was expected to remain strong, but added this represented less than 20% of Dulux Group’s revenue.
He told the meeting he expected the group to deliver an even stronger profit result for 2014-15.
Dulux had a net profit of $104.5 million in 2013-14, a 39% increase on the previous financial year’s $75 million.
DLX YTD – Home renovation demand drives Dulux
The one soft area in Australia is Dulux’s commercial and infrastructure division, which comprises about 16% of revenues.
"In Australia, the outlook for major engineering and infrastructure projects is weak as major capital expenditure projects – particularly in the mining sector – wind down, and the pipeline of new infrastructure projects is still some time away," Mr Houlihan said.
Mr Houlihan said conditions in China and Papua New Guinea were also expected to remain relatively soft.
He also pointed to softness in the garage doors and openers segment of the business, but this was offset by growth in the paints and coatings division.
Mr Houlihan said the company would monitor the “potentially adverse impact” of a lower Australian dollar, and the favourable effects of a lower oil price.
Dulux shares rose 0.3% to $5.74 yesterday after several days of losses in the oil driven sell-off.
