Reliance Worldwide’s share price has plummeted by more than a quarter after the manufacturer of plumbing fittings downgraded its full-year guidance and announced its first-half profit fell 23.8 per cent.
The Melbourne-headquartered firm said it made $50.1 million in profit for the six months to December 31, with revenue up 4.6 per cent to $569.3 million, compared with the same period in 2018.
RWC said it now expects to earn full-year profit of $140 million to $150 million, compared with prior guidance of $150 million to $165 million.
At 1330 AEDT, Reliance Worldwide shares were down 26.7 per cent to a six-month low of $3.41.
“The financial performance for the period was lower than plan,” Reliance Worldwide said in a statement.
“While we had flagged softness and uncertainty in some markets, ultimately most markets were weaker than expected and consequently sales growth was lower than projected.”
Reported in the Americas grew by 7.0 per cent, missing internal growth targets as US remodelling activity slowed and RWC deferred sales promotions.
RWC managing director Health Sharp said company reduced manufacturing volumes due to the lower sales activity, helping boost cash flow from operations by 163 per cent to $112.8 million and enabling the company to increase its interim dividend from 4.0 cents to 4.5 cents.
Reliance said it planned to close a manufacturing plant in Tennessee and consolidate US manufacturing in Alabama at a cost of US$4 million.
In Australia, it kept sales flat despite new housing starts being down 21.5 per cent for 12 months that finished September 30, RWC said.
The company said it was monitoring the impact on COVID-19 coronavirus would have on its supply chain but so far sees a minimal short-term impact.