DuluxGroup Slips Despite Reporting Full Year Profit Growth

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DuluxGroup Slips Despite Reporting Full Year Profit Growth

 DuluxGroup Slips Despite Reporting Full Year Profit Growth

DuluxGroup Limited (ASX: DLX), the leading manufacturer and marketer of premium decorative paints has reported its full year result on November 14, 2018. DLX made an announcement for its full year investor presentation that included group and business performance along with 2019 outlook of the company.

In line with its strategy, DLX remained focus on three key zones in the year 2018. Firstly, there was focus on other home improvement business, along with focus on further opportunities towards the improvement of revenue growth and EBIT margins. Secondly, the group focused on extensions of granular product range in resilient markets; and lastly on off shore transfer of specialty product portfolio and associated capabilities.

DLX posted 5.4% increase in NPAT (net profit after tax) up to $150.7m for the year ended September 30, 2018, as compared to the FY17. 3.3% rise in the sales revenue up to $1.84 billion was recorded in FY18. The sales revenue figure excluded the divestment of China coatings business which showed revenue growth of 4.5. 5% rise in Earnings before interest, tax, depreciation and amortization (EBITDA) up to $257.7 million in FY18 was noted. Earnings before interest and tax (EBIT) grew by 4.2% to $223.2 million which was backed by strong results posted across all Australian and New Zealand business segments which were driven by the strong performance from DLX ANZ business which is 70% contributor in the group business. The strong performance of ANZ business led to growth in sales revenue which showed 4.8% increment and 4.7% rise in EBIT up to $7.8m, with an EBIT margin maintained at 17.6%. 4.7% growth in EBIT up to $3.1m was noticed under DLX group’s other ANZ segments- Selleys and Parchem ANZ, B&D Group and Lincoln Sentry. 5.3% fall in EBIT up to $0.6m was recorded under other business segment. Growth in Yates and PNG was more than offset by investment in DuluxGroup’s UK business and Indonesian joint venture.

Final fully franked dividend declaration of 14 cents per share by the Board took the full year dividend to 28 cents per share, representing growth of 5.7% in FY18 as compared to previous year and payout ratio on NPAT at 72%.

The company has presented its business performance outlook for 2019. Management expects leading market indicators for the key markets to remain more or less positive. Then, Existing Home segment which contributes almost two thirds of group revenue is expected to show profitable and resilient growth. Supportive comments on GDP from Reserve Bank, low interest rate and low unemployment levels can help the group. New Housing which contributes around 15% to the group revenue, will encounter moderate approvals in FY19 and is expected to remain in line with the FY18 levels.

Commercial & Engineering segment which contributes around 15% of the group revenue, will have non –residential construction posting strong growth while engineering construction and maintenance segment may remain flat. Management expects NPAT in 2019 to be higher than 2018 which was recorded at $150.7m.

Despite a decent result, the scrip slipped slightly and traded at the levels of $7.39 on November 14, 2018.


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