Methven claims under investigation, shares shed June gains

Monday 6th July 2009

Methven, the manufacturer of taps and bathroom fittings, is facing prosecution by the Commerce Commission after a competitor laid a complaint about an advertisement’s claims. The shares dropped, erasing all of their gains last month on the NZX.

The regulator will pursue prosecution against the manufacturer over its advertising of Satinjet twin jet showerware technology.

Methven said the claims were indicative of the savings that could be achieved for showers connected to mains with a flow rate of 20 litres per minute, and that it had voluntarily recalled and altered all advertising and marketing while the investigation was underway.

The stock slumped 3.7% to $1.30 on the NZX 50 Index, the lowest in more than a month.

“We have cooperated fully with all aspects of the investigation,” said chief executive Gary Nel in a statement. The company is disappointed with the regulator’s decision to proceed with the action.

Methven’s shares have gained 8.9% this year as the company reported a 3.1% gain in full-year earnings from a one-time tax gain and strong sales in the UK.

The manufacturer said it understood the complaint was initiated by a competitor and relates to the extent of water savings that can be achieved by its Satinjet system. With the case before the courts, it can’t comment further.

The Commerce Commission has confirmed it’s pursuing the prosecution.

Businesswire.co.nz

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