DuluxGroup (DLX) expects its full year profit, excluding one-off items, to be higher than the previous year’s weak result.
The company revealed yesterday that earnings had jumped 88% from the impaired interim result a year ago.
Driving the rebound has been the full impact from the takeover of building products group, Alesco, plus the improvement in home building here and across the Tasman.
The company reported a net profit of $60 million in the six months to March 31, up from from $32 million in the same period a year earlier.
The result included several one-off items, and when they are excluded, the company’s profit was $56 million, up 34% from $42 million a year earlier.
After reporting a 14% slump in full-year profit to $76.9 million in November last year, due to impairment and integration costs associated with Alesco takeover, Dulux said it expects profit to be much higher this year, more than 2012-13’s $94.1 million.
That would be a rise of around $17 million, or more than 20%.
As a result of strong numbers, directors have boosted interim dividend 25% to 10 cents a share, a sure sign they expect a solid second month.
DLX 1Y – Dulux chart paints rosy picture
DuluxGroup managing director Patrick Houlihan said in a statement yesterday that the strong first half profit result largely came from better performances in the Australian and New Zealand markets, a full six month contribution of Alesco earnings and stringent cost management.
Boosted by a contribution from Alesco, sales revenue rose 16.5% to $804.5 million, compared with the previous first half.
Mr Houlihan said most lead indicators for the Australian market were largely positive, while growth in the New Zealand market was expected to continue.
"This is a really pleasing result. Both the heritage DuluxGroup businesses and the acquired Alesco businesses have delivered solid earnings growth. At the same time we have fully integrated the new businesses, delivered synergies ahead of target, and are well-placed to capture ongoing growth opportunities,” he said.
“DuluxGroup’s heritage businesses have continued to deliver strong results and earnings growth in improving markets. These businesses have a consistent track record of growth, despite mixed market conditions over the last few years, and are well placed now that our core ANZ markets have largely returned to growth,” said Mr Houlihan.
“The Alesco businesses have generally outperformed in mixed markets conditions, supported by some market share gains and pricing initiatives, and by increased investment in marketing and sales effectiveness.
"We have also re-structured the businesses to reflect their end customer markets, and are beginning to see the benefits of leveraging DuluxGroup capability,” the company said yesterday.
Dulux shares rose half a per cent to $5.76 in a market that was heavily sold off.
