Omega appliance sales hurt Shriro earnings

Due to changeover of product.

Shriro has announced group earnings of $14.3 million for the half year ended 31 December 2018, a 42.1% fall from the previous corresponding period.

This result included several non-recurring costs, totaling $1.5 million, including the closure of two showrooms, the re-location of compliance and R&D team, re-arrangements at Auckland Airport G-Shock store and write-down of residual inventory.

The kitchen appliance division suffered lower sales in a difficult trading environment with strong competitive pressures across the appliance market and Omega cooking products being forced to exit the market to allow for updated models. This resulted in lower gross margins as the discontinued stock was sold.

The new Inverno by Omega kitchen appliance range

Kitchen appliances

Revenue from the kitchen appliances segment was $74.3 million for the half, 10.9% lower than the prior year, due to market decline, competition, currency headwinds and phasing out of older products.

Blanco retail appliances performed well with 19% sales growth, however, the Omega product range had a poor year with the need to phase out superseded products. Commercial sales also faced tight market conditions with high-rise apartment demand slowing and some projects being deferred.

The company closed its showrooms in Queensland and Victoria with their function now carried out at the NSW showroom. This is expected to result in a cost reduction of approximately $900,000 per annum.

Shriro has appointed the general manager of its New Zealand operations, Carl Pauling, to a new role responsible for the Australia kitchen appliance division. With support, he will remain responsible for the New Zealand business. Shriro has also appointed former Winning Appliances Commercial general manager, Brad Street to focus exclusively on the commercial market.

There have also been changes to the kitchen appliances sales staff structure where resources will be focused on the various channels to market rather than be heavily brand oriented.

Consumer products

In the consumer products division, total earnings before interest and tax (EBITDA) was $13.9 million, 14% below the prior year, due mainly to the investment in the USA BBQ launch, with advertising and promotion costs of $2.6 million.

Shriro has relocated its Australian compliance, R&D and testing team for the Everdure by Heston Blumenthal BBQs to its head office in Sydney and is looking to appoint an export sales manager to assist global expansion.

During the half period, watches and BBQs performed strongly in Australia and in New Zealand, Pioneer Electronics was the stand out performer. Other product categories did not add growth to the division.

Shriro has developed new products in cooling and gas heating that will be released to the market in 2019 that may be fed into the company’s global distribution network.

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