By Sarah Falson
SYDNEY: Shares in GUD Holdings plunged this afternoon as the parent company of Sunbeam, Victa and Bissell announced that net profit for the half-year ending 31 December 2006 fell 26.44 per cent to $14.86 million, compared to the same period a year ago.
Shares fell by over 40 cents or over 5 per cent overall as the company said its earnings were hurt by internal restructuring costs along with a decline in trading earnings. Despite a strong performance was Sunbeam small appliances which was described as "solid" with sales increasing above expectations, other businesses affected the overall result including a poor result from Victa lawnmowers.
The company also reported a 10 per cent reduction in trading EBIT to $29.2 million from $32.4 million in the same period, and declared an interim dividend of 27 cents per share, which mirrors the first six months of fiscal 2006.
“Net reported profit fell 26 per cent to $14.9 million from $20.2 million reflecting the 10 per cent reduction in trading and the $3.5 million pre-tax charge (announced at the AGM in October) associated with restructuring the New Zealand automotive filter business,” said GUD’s statement.
GUD manufactures and distributes Sunbeam small appliances and Victa lawnmowers, and also owns the Oates Clean business which distributes in Melbourne.
“Performance across the business portfolio was mixed. Water Products increased EBIT 50 per cent to $10.7 million due to benefits of its bolt-on acquisition strategy, new products and organic growth in the expanding water products market,” said the statement.
According to GUD, demand for Victa lawnmowers in the “grass-growing months” or October through December 2006 was weak due to the impact of droughts throughout the country.
The Oates Clean business underperformed “due to delays in contrinution from the Bissell product range and competitive conditions in cleaning products markets,” said GUD.
Costs of $2.0 million associated with the valuation of forward foreign exchange contracts also impacted the result.
According to GUD managing director, Ian Campbell, the 10 per cent lower EBIT performance was driven by the unsatisfactory trading in Victa and Oates.
“I am confident that our positive momentum within the Water Products business and Sunbeam will continue to underpin solid financial returns in future periods," Campbell said in a statement.
"Sunbeam’s sales increased ahead of expectations. Profit contribution before hedging costs and increased product costs due to higher commodity prices, specifically aluminium, copper and plastics and freight charges, also increased. This business continues to have success with new products as evidenced by its recent entry into the gas barbeques market during the period.
Sunbeam continues to enjoy clear market leadership in the Australian small appliance market and grew market share in New Zealand over the half year.
Victa enjoyed a strong first quarter sell-in, but the benefits of expanded retailer ranging did not accrue due to drought induced slow demand in the second quarter."