Reece cuts payout after hefty drop in half-year profit
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The news: Plumbing supplier Reece reported a sharper-than-expected 19% drop in half-year profit and slashed its dividend, citing tough trading conditions in its two key markets, the US and ANZ.
The numbers: Net profit for the six months to December fell to 180.9 million, down 19.1% from a year ago and below the $189 million estimated by analysts, based on consensus data from Visible Alpha.
Sales revenue was down 3% to $4.4 billion. The company will pay a lower-than-expected interim dividend of 6.5 cents a share, down from 8 cents a year ago.
The context: Reece group chief executive Peter Wilson said the performance reflected the challenging trading environment in both ANZ and the US — its two main regions — as mortgage rates and affordability continued to create near-term headwinds in the sector.
The company said earnings were down 12% in ANZ and 6% in the US. Costs increased by 3.6% during the half year due to ongoing investment in the business, including two bolt-on acquisitions in ANZ.
What they said: “While we know the short term will have its challenges, the current environment is one Reece has seen before," Wilson said.
"Like we always do, we’ll look beyond the cycle to protect and grow the business."
The source: ASX
