Reliance shares climb despite half-year earnings hit
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The news: Reliance Worldwide shares surged over 9% in early trading after the plumbing supplies manufacturer retained its full-year guidance, despite a downturn in year-on-year earnings.
The numbers: Reliance shares were up 9.1% to $4.82 at 12:20pm AEDT.
Earlier in the day, the company reported net profit after tax of USD51 million ($78 million) for the six months to December 2023, a 23% drop compared to the prior corresponding period. Net sales dipped 2% to USD589.5 million from 1H22, while reported EBITDA was down 19% to USD112.6 million.
Reliance declared an interim dividend of 2.25 cents per share, down from 4.5 cents per share in the previous half-year period.
The context: The company said its first-half sales performance was impacted by lower volumes in its EMEA and APAC segments, while Americas sales remained consistent. Meanwhile, it announced a new share buyback to help meet its shareholder payout plans.
Reliance reported its half-year results a week after announcing the acquisition of plumbing products group Holman Industries for $160 million.
What they said: Reliance's CEO Heath Sharp said: "As we expected, the UK and continental Europe was our most challenging region. UK plumbing and heating sales slowed during the half and were down 6%, while sales of specialty products were down 20%. These speciality product sales are linked to broader commercial activity which was adversely impacted by weak economic conditions in both the UK and continental Europe."
UBS analysts said the company's results was solid and "while outlook is broadly unchanged we see this as a positive given the much better starting point as we bridge 1H to 2HFY24. In part this is the continued cost focus by management as well as tailwinds from lower tax rate guidance".
The source: ASX announcement
