Global plumbing and kitchen supplies group, Reliance Worldwide revealed better than expected 2019-20 figures on Monday, prompting a near 18% surge in the share price by the close.
In fact, at one stage, shares in Reliance Worldwide were up more than 23% at one stage before settling back to still be the day’s top performer.
They finished up 17.7% at $3.38.
The company trimmed full-year payout to 7 cents a share from 5 cents with the payment of a 2.5 cents a share final.
That’s a cut of 50% from the final for 2018-19 and a sign that despite the better than expected performance, there’s still a lot of caution about the outlook for business in a world still dominated by COVID-19.
“The duration of the pandemic and its impact on the business remain uncertain’’, the company said, adding it would not provide guidance for the year ahead in lieu of periodic updates (unlike it did a year ago).
Reliance said strong revenue growth from the Americas helped sales increase 5% in the full year to $1.1 billion.
However, after-tax profit dropped 18% to $130.3 million.
Restructuring and impairment charges of $33.4 million cut earnings before interest, tax, depreciation, and amortisation (EBITDA) to $251.3 million from $277 million the year before.
The impairments include a $17.3 million write off for “new product initiatives in the US” that have been scrapped and some pipe manufacturing assets in Spain.
However, the results beat market forecasts 9well short of the mark) of EBTIDA of $119 million and net profit $53.7 million.
Reliance said sales performance were driven by the extent of COVID-infections in each market. Sales in the Americas increased 13% and 3.4% of this ‘’was directly attributable to COVID-19 influenced sales” with fittings and pipes very popular. as renovations of kitchens and bathrooms were popular.
“Demand in the second half was impacted by shelter-in-place orders across a number of states and provinces in the US and Canada,’’ the company said.
“This impacted the ability of professional plumber services within homes and on construction sites. Strength in demand through US retail and hardware channels from both DIY customers and pro plumber customers more than offset reduced demand from wholesale channels and Canada.’’
Meanwhile, sales in Asia Pacific dropped 2% and Europe, Middle East and Africa (EMEA) sales were down 10%.
Reliance Worldwide said it would start reporting results in US dollars from July 2021 (like the big miners, insurer QBE and packager Amcor).
