GWA POSTS LOSS AFTER MANUACTURING EXIT
Written on the 18 August 2015
GWA Group Limited's (ASX:GWA) bottom line has plunged into the red, following restructuring costs as it exits the manufacturing industry.
The building fixtures supplier posted an after tax loss of $16.2 million, compared to a profit of $18.6 million in the previous year.
GWA has shifted focus to its bathrooms, kitchens and access systems businesses, after divesting Dux Hot Water, Brivis Climate Systems and Gliderol Garage Doors over the past year.
The loss on divested businesses and an impairment charge against the Gliderol sale totalled $27.6 million. While normalised net profit after tax from continuing operations was $45.2 million, up 19 per cent from FY14.
Outgoing GWA managing director Peter Crowley says the strategy to discontinue manufacturing places the group in a strong financial position.
"We have market-leading positions and strong brands across all segments, supported by a strong financial position, which enables us to continue our investment in systems and product innovation," Strong says.
"We are also restructuring the organisation to deliver a more effective operational model through overhead and supply chain efficiencies to fund investment in selected organic growth opportunities.
"The increase in dwelling commencements during FY15 is expected to flow through to increased dwelling completions in FY16 and our strategy is to ensure our core businesses are well positioned to capitalise on improving market trends to build their competitive position further."
Revenue in the bathrooms and kitchens division rose 8 per cent to $330 million, reflecting price increases to offset the impact of the lower Australian dollar.
Doors and access systems division revenue increased 4 per cent to $96.2 million, however earnings were impacted by flat volumes resulting in a decline in normalised EBIT to $7.2 million.
A final dividend will not be paid, however GWA returned 28.8c per share to shareholders during a return of capital in June.
"The company will continue to consider available capital management initiatives with a view to maximising shareholder returns," Crowley says.
"Separately, the board expects to resume ordinary dividends from the interim dividend for FY16, subject to prevailing market and trading conditions."
Diageo Australasia managing director Tim Salt will replace Crowley next year.