Paint, glue and garden products supplier DuluxGroup says there are signs of a pickup in the housing market.
Two thirds of DuluxGroup’s business is exposed to the home renovations market, and 16 per cent is exposed to new housing.
“We’re seeing good indicators in residential home improvement,” DuluxGroup managing director Patrick Houlihan said on Wednesday.
“In terms of new housing, we’re seeing green shoots in that regard.”
DuluxGroup made a net profit of $76.9 million in the year to September 30, down 14 per cent on the prior year’s $89.5 million. Excluding non-recurring items, profit rose 18 per cent to $94.1 million, as the group benefited from the acquisition of building products and garage door maker Alesco in December 2012, plus gains in market share.
Profit excluding non-recurring items is expected to grow in the year ahead, Mr Houlihan said.
The company’s sales in the largest sector of the renovator market, paint, were flat in 2012/13, but that was an improvement on the prior year when the market had been down by about four per cent.
In Australia and New Zealand, which account for more than 90 per cent of DuluxGroup’s revenue, influential factors such as interest rates, consumer confidence and house prices had improved over the second half of 2012/13.
DuluxGroup expects continued strength in the New Zealand market, underpinned by the rebuilding of earthquake damaged Christchurch.
Markets in in China and Papua New Guinea, which collectively provide about seven per cent of DuluxGroup’s revenue, are expected to remain soft in the near term.
Mr Houlihan said the integration of Alesco was going well, and cost savings from combining the two businesses had been more than expected.
The group was now focusing on marketing for Alesco, to boost revenue.