Methven Focuses on Future Growth

19 July, 2012

Methven Focuses on Future Growth

Leading New Zealand shower and tapware designer Methven Limited [MVN], today announced that despite the tough global economic conditions, the company is targeting positive earnings and cashflow growth.

Addressing shareholders at today’s Annual Meeting, Chairman Phil Lough said that the sustained economic slowdown has had a significant impact on the business, but through prudent management and steadfast determination the company delivered a credible result.

“We’re not delighted by any means, but we are proud of what we’ve achieved in these tough conditions,” Mr Lough said.

“We have repositioned the business for the current economic climate and are now poised for growth. We are confident that our products and point of difference can deliver continued positive earnings. However, it still remains imprudent to provide profit guidance on the level of growth we might achieve.”

Reinforcing confidence in achieving future growth, performance-based schemes with built-in growth targets are being implemented for both the Board and Executive Management Team.

“Today the Board announced an initiative for performance-based director fees. This innovative approach will see Directors’ fees increased only if the Company achieves a 20% or more increase on the prior year’s reported Net Profit After Tax,” Mr Lough said.

“If we don’t achieve the growth target, the Directors’ fees will remain unchanged. This approach provides transparency and aligns Directors’ remuneration with returns to shareholders. In addition, we are also developing an Executive Incentive Scheme with share price targets.”

According to Mr Rick Fala, Methven Group CEO, the Company is undeterred by the gloomy sentiment around the Australian housing market and the financial situation in Europe, advising that the business has a range of targeted ideas and strategies to improve results and deliver growth.

“We are bursting with new ideas and innovations,” Mr Fala said. “Investment in design and innovation continues to be a priority for the business, ensuring that Methven remains at the forefront of industry with products with a competitive edge.”

“We have a pipeline of new shower and tapware products as well as further enhancements to Methven’s innovative proprietary Satinjet technology. Delivering more shower for less water, the technology performs at much lower flow rates, reducing water and energy consumption, without compromising the shower experience.”

“With the world suffering from water shortage stress, there are huge opportunities for our proprietary technology, particularly in emerging markets.”

Mr Fala added that China represents a real growth opportunity for Methven.

“Off the back of attending the world’s largest kitchen and bathroom trade fair in Shanghai and the appointment of two new distributors, we will be investing further in this emerging market,” Mr Fala said.

Maintaining cost control disciplines and further improvements to operational efficiency continues to be an important focus throughout the business.

“We are on a journey to simplify the business to achieve global efficiencies. Reduced duplication combined with product and supplier rationalisation will contribute to reduced costs, however we will not see the true benefits of some initiatives until the second half,” Mr Fala said.

Phil Lough added that the Board has a continued positive outlook and confidence to improve results and deliver profit.

“We expect to grow full year Net Profit After Tax and reduce Net Debt further. However, as a result of the current economic climate in the UK and only a marginal improvement in Group Net Debt, we anticipate first half earnings to be down,” Mr Lough said.

“We are confident that we have the strategy, the team, the products and more importantly the resilience to deliver sustainable returns and growth to shareholders in these tough economic conditions.”

About Methven
A pioneer in bathroom and kitchen plumbing for over 125 years, Methven is New Zealand’s oldest and largest designer of shower and tapware to builders, plumbers and home renovators. Today, Methven is a world-class international business with our proprietary technology, shower systems and tapware ranges earning a reputation for innovation, high quality, and water and energy efficiency. Methven has won prestigious design awards worldwide for the innovative functionality and water and energy saving aspects of our products including the prestigious Red Dot and Good Design Awards.

For more company information, visit www.methven.com

ENDS

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