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Metro Glass issues profit warning

NZ Newswire logoNZ Newswire 2/02/2017 Rebecca Howard

Metro Performance Glass, which has more than half the country's glass processing market, says it annual net profit is likely to be similar or even lower than last year.

It said local sales lagged behind expectations with dwindling work in Canterbury and a dip in Wellington.

The Auckland-based company said it expects net profit to be in a range of $19 million-$20.5 million in the year ending March 31 compared to last year's profit of $20.5 million.

Revenue is expected to be $240m-$245m versus $188m in the prior period.

The guidance includes seven months of trading from Australian Glass Group with sales estimated to be in a range of $27m-$29m. Metro Glass bought AGG in August for $A43.1m ($NZ45.3m).

"Whilst Metro Glass's sales in the year to date have grown considerably versus last year, sales have recently lagged behind the company's expectations due to a faster-than-expected slowdown in the Canterbury residential market and a short-term drop in activity in Wellington following the November 2016 earthquake," the company said in a release to the New Zealand stock exchange.

Metro Glass also noted that scaling up production and distribution capability in the North Island has added to operating costs in the short term.

"Meanwhile, momentum in the commercial project market continues to fluctuate, with certain large projects in particular facing protracted installation timetables. This volatility has resulted in inefficiencies for Metro Glass in production planning and inventory and labour management," it said.

In Australia, it said the integration of AGG with Metro Glass is on track and the business has been trading to its expectations.

Chairman John Goulter said the supportive construction market outlook will ensure revenue growth for several years but the company needs to focus further on automation, process and cost saving across manufacturing, logistics and glazing.

The shares, which listed at $1.70 on the NZX in 2014, last traded at $1.89.

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