Methven Predicts Major Profit Lift in Difficult Climate

22 July 2011

Methven Predicts Major Profit Lift in Difficult Climate

Luxury shower and tapware designer Methven announced today a positive forecast, despite the difficult economic climate, citing encouraging progress in the turnaround of its UK division and improving operational efficiency.

Key points included:

• A predicted 90% year on year profit increase to $9 million (up 27% excluding prior year Focus (DIY) Ltd impact)
• UK division expected to return to profit
• Improved operational efficiency
• Worldwide recognition of Methven’s sustainable designs

Presiding over the company’s Annual General Meeting, Chairman Phil Lough expressed his confidence in the future of the Methven Group.

“The past year has been a challenging one for Methven compounded by the loss of our largest UK customer, Focus (DIY) Ltd that entered into voluntary administration. However, our outlook for next year is much better. We are predicting a 34% year on year profit increase based upon reaping the benefits of the operational improvements started last year.”

Methven Group CEO, Rick Fala, confirmed that the turnaround initiatives put in place in the UK last year, along with wider group operational efficiency improvements, would ensure the company achieved significant profit uplift over the next 12 months.

“Despite a difficult year, particularly in the UK, we are still in a solid financial position Since fully providing for the loss of Focus (DIY) last year, we have successfully negotiated settlement with the administrator of 55 pence to the pound. That cash settlement is in the bank – our bank. More importantly, we embarked on an aggressive UK turnaround strategy mid last year. This led to the appointment of our new Methven UK CEO Steve Lee in November 2010. With his considerable expertise and industry experience as ex-Chairman and CEO of the largest UK tapware company Bristan, Steve has accelerated our strategies to grow the UK business. Our strategy of expanding our showroom presence is progressing well with 13 new Methven showroom stockists confirmed and more in the pipeline.”

Mr Fala added that Methven had received encouraging feedback from international tradeshows this year, including London, Frankfurt and Shanghai. Results had been pleasing and indicated that brand recognition was improving and leading to distribution opportunities that the company was pursuing.

Mr Fala further emphasised that Methven would continue investing in design and innovation as the platform to enable expansion across all international markets.

“We are as committed as ever to design and innovation – and after increasing investment 50% last year – we will continue to invest in expanding our portfolio of proprietary products,” explained Mr Fala. “Our award winning Satinjet range will be expanded to cover all price points, and we will develop thermostatic and digital shower technologies that not only improve the user experience, but also save water and energy. We place great value on sustainable design, something that was recognised when our new generation Kiri Satinjet ultra low flow shower won the 2011 Good Design Green Award in Chicago.

“We have had more than our fair share of challenges this year and we have implemented the lessons we have learned,” he added. “However our vision to be the leading global shower brand remains undiminished and with our improved product range, more competitive supply chain and a stronger and more experienced team, we have confidence in our ability to deliver a substantially improved profit forecast”

For more company information, visit www.methven.com.

ENDS

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