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Metro Glass shares tumble

NZN 2/02/2017 Rebecca Howard

Metro Performance Glass shares have dropped 17.5 per cent after the company said annual profit was likely to be similar or lower than the prior year.

The Auckland-based company, which has more than half the country's glass processing market, expects net profit to be in a range of $19 million to $20.5m in the year ending March 31 versus a profit of $20.5m a year earlier.

Revenue is expected to be $240m-to-$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 to $29m. Metro Glass bought AGG in August for $A43.1m ($NZ45.3 m).

The shares, which listed at $1.70 on the NZX in 2014, last traded at $1.56.

Nick Dravitzki, equity analyst at Devon Funds Management, says the market is clearly disappointed by the earnings number, which was at least 10 per cent below what was expected.

"The issue seems to be their cost base is higher than expected," he said.

The company said sales have recently lagged due to a faster-than-expected slowdown in the Canterbury residential market and a short-term drop in activity in Wellington following the Kaikoura earthquake.

Chief executive Nigel Rigby says the company is going well in a revenue sense but scaling up production, distribution and technological capability had increased costs.

He expected the situation to improve after the current financial year.

It had been an "interesting four or five months" with Canterbury slowing, the earthquake in Wellington causing delays.

He was upbeat about AGG.

"We are now five months into the acquisition and it is tracking to expectations... There are no surprises to date."

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