Global plumbing products group, Reliance Worldwide (ASX:RWC), reported the same weak results on Tuesday as its Australian-focused rivals, GWA and Reece, did on Monday.
Both local companies managed a small rise in dividends, but Brisbane-based RWC has again taken the unusual step of making a major change to the structure of its dividend with the aim of minimising the lack of Australian earnings and franking credits.
RWC said net sales for the year edged up to $US1.25 billion, from $US1.24 billion for 2022-23. That included a small contribution from the $130 million acquisition of Holman Industries, which settled in March.
RWC said that without the contribution from Holman, the 0.2% rise in sales became a fall of 2.4%. There will obviously be a larger contribution this year.
Statutory net earnings, though, weakened to $US110.6 million, down 21%. On an adjusted basis (ignoring one-offs), earnings dipped 5.7% to $US149.6 million after adjusted EBITDA came in at $US274.6 million, steady on a year earlier, while EBIT fell 3.4% to $US214.5 million.
Directors said that for the six months to December, they expect group external sales to be broadly flat, within a range of up or down by low single-digit percentage points, excluding the impact of Holman and Supply Smart.
The company will pay a final of 5 US cents a share, but that will again be split evenly between a cash dividend and a share buy-back, reflecting the company’s robust financial strategy. (The interim at the start of this year was split in the same way.)
The company explained that the 5 cents a share will comprise "an unfranked final cash dividend of US2.5 cents per share and the undertaking of an on-market share buy-back for US$19.6 million (equivalent in total to US2.5 cents per share)."
"This is in line with the revised distribution policy announced in February 2024, with the total distribution amount for a period allocated approximately 50 percent to a cash dividend and 50 percent to on-market share buy-backs."
The lack of franking means the company’s earnings in the US and elsewhere outside Australia are now greater than in Australia – in fact, the company says Australia now accounts for only 10% of earnings.
Despite the change, investors haven’t abandoned the company, with the share price up more than 8% yesterday.
