Daily ShareChat: Methven

Taps and showerware manufacturer Methven's latest result was creditable "given its challenging second-half demand conditions," says Adrian Allbon at Goldman Sachs JB Were.

Methven reported a 3.5% rise in net profit to $10 million for the year ended March 31.

"Critically, operating cash flows improved to $16.5 million (from $10.8 million the previous year), driven by tighter working capital management and net debt reduced by 18% to $27 million," Allbon says.

Although Methven cut its final dividend to 5.5 cents a share from six cents last year, this was prudent and not a source of disappointment to investors, he says.

Although New Zealand revenues were down 11%, driven by softer market conditions, careful cost control meant earnings were only down 10%, including the development costs of the Maia beauty shower and all group overheads.

And Australia continues to be a strong growth market for Methven, notwithstanding a sharp decline in March quarter activity, Allbon says.

"Against a backdrop of dire UK market conditions, we think Deva performing in line with pre-acquisition expectations was the standout in the result," he says. Methven bought Deva in 2007 for $59 million.

The company's cautious outlook statement suggesting a tough first half with prospects improving thereafter was "consisten6t with our view and is understandable, given Methven is a later-cycle product."

BROKER CALL:  Goldman Sachs JB Were rate Methven (NZX: MVN ) as BUY.

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