As expected, the bottom line of paint maker DuluxGroup (DLX) took a hit in the six months to March after the company had revealed plans for a revamp of its manufacturing and distribution chain along the eastern seaboard.
The company said in the March announcement of the revamp, that 140 jobs would be cut and restructuring ands financing costs for the changes, which include a new paint factory in Melbourne, would be take in the half year.
The overhaul includes construction of a $165 million new paint facility in Melbourne, scaling down production in Brisbane, and distribution and logistics changes.
As a result, the company yesterday reported a 17.5% drop in interim profit to $49.5 million after accounting for those costs.
Stripping out the one-off charges, Dulux reported a 9.3% rise in profit to $61.4 million for the half.
A fully franked interim dividend of 11c a share, up 10% on the interim for last year, was declared.
Revenue for the six months ended March 31 rose 4% to $836.9 million, the company told the ASX in yesterday’s release.
DLX 1Y – Dulux H1 profit up 9.3%
Managing director Patrick Houlihan said that most businesses had delivered growth during the half.
He said the result was driven by "profitable sales growth in most of DuluxGroup’s individual businesses, in generally positive market conditions. Effective input cost control across the group and lower oil prices largely offset the impact of the weaker Australian dollar.”
“DuluxGroup has delivered 9.3% net profit growth, underpinned by the continued strong performance of our largest business, Paints and Coatings Australia and New Zealand.
“Two of our businesses, B&D Garage Doors and Openers and Parchem Construction Products, experienced revenue and profit challenges during the half, due in part to softer markets and the transitional impact associated with the implementation of important strategic initiatives, particularly in B&D.
"We are confident that we have the strategies in place to improve and grow these businesses.
“We have also made very good progress operationally, including announcing significant investments in our manufacturing and supply chain to support ongoing growth in our core ANZ businesses for decades to come,” he said.
Looking to the rest of the year the compony was upbeat, saying "Lead market indicators for our key markets remain largely positive. Subject to economic conditions, and excluding non-recurring items, we expect that 2015 net profit after tax will be higher than the 2014 equivalent of $111.9 million.”
Dulux shares fell more than 5% to $6.19. They are off their all time high of $6.73 on April 27.
