Dulux Group is looking for more acquisitions as it finalises its takeover of Porters Paint.
Managing director Patrick Houlihan says the group is in a good position to expand its paints and coatings business despite a first half profit slump of 17.5 per cent.
The group, whose brands include Dulux, Selleys and Cabot’s, made a net profit of $49.5 million for the six months to March 31, down from $60 million in the same period a year ago.
The paint maker said charges related to redundancies as it scales down production at its Queensland factory and moves to build a new $165 million paint factory in Melbourne and distribution centre in NSW contributed to the profit slide.
Underlying profit, which excludes one-off costs, rose 9.3 per cent to $61.4 million following a four per cent lift in sales. Mr Houlihan said full year profit was expected to be higher than the 2014 financial year’s $111.9m result.
He said the key home renovation market in Australia and New Zealand, which make up 62 per cent of the business, was expected to continue to provide strong growth.
The new housing market, which makes up about 18 per cent of the group’s business, is also expected to remain strong. Mr Houlihan said the company was in a good position to acquire more businesses in the paint and coatings segment.
“We are looking at opportunities,” he said.
“We are in the throes of completing the acquisition of Porters Paint and while it’s relatively niche it’s something we can take offshore and use that brand.
“We will continue to build on the fact we now have the Parchem and Selleys business; we’ll look at how else we can play in the construction chemicals market.”
Bell Direct equities analyst Julia Lee said the four per cent sales growth during the first half was not spectacular considering the current housing boom.
“We are seeing a booming housing cycle at the moment so you’d expect Dulux would be benefiting from that,” she said. “On the other hand, Dulux trades very much like a consumer discretionary stock and consumer confidence has been rather lacklustre.”
DULUX RESULTS DOESN’T PAINT TOWN RED
- Revenue of $836.872m, up 4pct from $804.455m
- Net profit of $49.468m, down 17.5pct from $59.997m
- Fully franked interim dividend 11 cents a share, up from 10 cents