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Metroglass profit dips on expansion costs

NZN 24/05/2017 Pattrick Smellie

Metro Performance Glass has delivered a $19.4 million net profit for the year to March 31, down from $21.3 million a year earlier.

It's had to absorb the costs of a major acquisition in the Australian market, the impact of declining building activity in Canterbury, and a dip in Wellington activity after the Kaikoura earthquake last November.

Reflecting its Australian Glass Group acquisition last September, total revenue rose 30 per cent to $244.3 million, with earnings before interest, tax, depreciation and amortisation, normalised to exclude $1m of one-off expenses associated with the purchase coming in 20 per cent higher than the previous year, at $44.9 million.

The company will pay a final dividend of 4 cents per share, fully imputed for New Zealand shareholders, to equal total dividends in the previous year of 7.6 cents per share.

The company has signalled it is assessing AGG's "short-to-medium-term capital requirements to allow it to achieve its significant potential over the medium term" and that capital expenditure will increase in New Zealand in the year ahead to meet requirements in the upper North Island.

"While it is still early days for us, AGG has proved a sound investment to date," said chief executive Nigel Rigby in a statement to the NZX.

"Both sales and ebitda (came) in ahead of our expectations for the seven months to 31 March, 2017."

Seven months' trading from AGG contributed revenue of $30.5m and ebitda of $4.7m and would have contributed $52m and ebtida of $9m, had MPG owned the asset for the whole of the financial year.

MPG shares dropped 18 per cent in one day on Febuary 3 after it downgraded its earnings expectations.

But chairman John Goulter said in statements on Thursday the company was in a development investment phase that came with "some initial cost and will provide improved returns over time" and allow the company to "defend itself against import competition for the long term".

The shares closed on Wednesday at $1.39, having fallen 21 per cent in the last year.

MPG listed on the NZX at $1.70 per share in 2014.

The company supplies about half the New Zealand market for construction sector glass but is stronger in residential than commercial glass supply, with focus turning to building commercial revenues, along with a push into the growing market to retro-fit existing windows with double glazing.

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